Turtle Beach Corporation's (NASDAQ:TBCH) 28% Cheaper Price Remains In Tune With Revenues

Turtle Beach Corporation (NASDAQ:TBCH) shareholders won't be pleased to see that the share price has had a very rough month, dropping 28% and undoing the prior period's positive performance. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 12% in that time.

Although its price has dipped substantially, you could still be forgiven for feeling indifferent about Turtle Beach's P/S ratio of 0.7x, since the median price-to-sales (or "P/S") ratio for the Tech industry in the United States is also close to 1x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

View our latest analysis for Turtle Beach

What Does Turtle Beach's Recent Performance Look Like?

Recent times have been advantageous for Turtle Beach as its revenues have been rising faster than most other companies. It might be that many expect the strong revenue performance to wane, which has kept the P/S ratio from rising. If the company manages to stay the course, then investors should be rewarded with a share price that matches its revenue figures.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Turtle Beach.

What Are Revenue Growth Metrics Telling Us About The P/S?

In order to justify its P/S ratio, Turtle Beach would need to produce growth that's similar to the industry.

If we review the last year of revenue growth, the company posted a terrific increase of 44%. Still, revenue has barely risen at all from three years ago in total, which is not ideal. Therefore, it's fair to say that revenue growth has been inconsistent recently for the company.

Shifting to the future, estimates from the three analysts covering the company suggest revenue should grow by 8.0% per year over the next three years. That's shaping up to be similar to the 7.2% each year growth forecast for the broader industry.

With this information, we can see why Turtle Beach is trading at a fairly similar P/S to the industry. It seems most investors are expecting to see average future growth and are only willing to pay a moderate amount for the stock.

What We Can Learn From Turtle Beach's P/S?

Following Turtle Beach's share price tumble, its P/S is just clinging on to the industry median P/S. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

Our look at Turtle Beach's revenue growth estimates show that its P/S is about what we expect, as both metrics follow closely with the industry averages. Right now shareholders are comfortable with the P/S as they are quite confident future revenue won't throw up any surprises. All things considered, if the P/S and revenue estimates contain no major shocks, then it's hard to see the share price moving strongly in either direction in the near future.

Before you take the next step, you should know about the 2 warning signs for Turtle Beach (1 is potentially serious!) that we have uncovered.

If you're unsure about the strength of Turtle Beach's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.