Revenues Tell The Story For SurgePays, Inc. (NASDAQ:SURG)

With a median price-to-sales (or "P/S") ratio of close to 0.7x in the Wireless Telecom industry in the United States, you could be forgiven for feeling indifferent about SurgePays, Inc.'s (NASDAQ:SURG) P/S ratio of 0.6x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

View our latest analysis for SurgePays

How SurgePays Has Been Performing

Recent times have been advantageous for SurgePays 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.

Keen to find out how analysts think SurgePays' future stacks up against the industry? In that case, our free report is a great place to start.

How Is SurgePays' Revenue Growth Trending?

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

Taking a look back first, we see that the company grew revenue by an impressive 42% last year. The latest three year period has also seen an excellent 149% overall rise in revenue, aided by its short-term performance. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Shifting to the future, estimates from the two analysts covering the company suggest revenue should grow by 3.3% over the next year. That's shaping up to be similar to the 2.1% growth forecast for the broader industry.

With this in mind, it makes sense that SurgePays' P/S is closely matching its industry peers. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

The Final Word

We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

A SurgePays' P/S seems about right to us given the knowledge that analysts are forecasting a revenue outlook that is similar to the Wireless Telecom industry. At this stage investors feel the potential for an improvement or deterioration in revenue isn't great enough to push P/S in a higher or lower direction. 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.

It's always necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with SurgePays (at least 1 which can't be ignored), and understanding these should be part of your investment process.

If you're unsure about the strength of SurgePays' 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.