Capital Clean Energy Carriers Corp.'s (NASDAQ:CCEC) Share Price Matching Investor Opinion

Capital Clean Energy Carriers Corp.'s (NASDAQ:CCEC) price-to-sales (or "P/S") ratio of 3x may look like a poor investment opportunity when you consider close to half the companies in the Shipping industry in the United States have P/S ratios below 0.9x. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.

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What Does Capital Clean Energy Carriers' P/S Mean For Shareholders?

Recent times have been advantageous for Capital Clean Energy Carriers as its revenues have been rising faster than most other companies. The P/S is probably high because investors think this strong revenue performance will continue. If not, then existing shareholders might be a little nervous about the viability of the share price.

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How Is Capital Clean Energy Carriers' Revenue Growth Trending?

There's an inherent assumption that a company should far outperform the industry for P/S ratios like Capital Clean Energy Carriers' to be considered reasonable.

Taking a look back first, we see that the company grew revenue by an impressive 84% last year. The latest three year period has also seen an excellent 67% overall rise in revenue, aided by its short-term performance. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Turning to the outlook, the next year should demonstrate the company's robustness, generating growth of 7.9% as estimated by the five analysts watching the company. That would be an excellent outcome when the industry is expected to decline by 8.0%.

With this information, we can see why Capital Clean Energy Carriers is trading at such a high P/S compared to the industry. At this time, shareholders aren't keen to offload something that is potentially eyeing a much more prosperous future.

The Bottom Line On Capital Clean Energy Carriers' 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.

As we suspected, our examination of Capital Clean Energy Carriers' analyst forecasts revealed that its superior revenue outlook against a shaky industry is contributing to its high P/S. Outperforming the industry in this manner looks to have provided investors with a bit of confidence that the future will be bright, bolstering the P/S. Our only concern is whether its revenue trajectory can keep outperforming under these tough industry conditions. Otherwise, it's hard to see the share price falling strongly in the near future under the current growth expectations.

Before you take the next step, you should know about the 2 warning signs for Capital Clean Energy Carriers (1 is a bit concerning!) that we have uncovered.

If these risks are making you reconsider your opinion on Capital Clean Energy Carriers, explore our interactive list of high quality stocks to get an idea of what else is out there.

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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.