Why Investors Shouldn't Be Surprised By FTAI Infrastructure Inc.'s (NASDAQ:FIP) 30% Share Price Surge

FTAI Infrastructure Inc. (NASDAQ:FIP) shares have continued their recent momentum with a 30% gain in the last month alone. The last month tops off a massive increase of 133% in the last year.

After such a large jump in price, when almost half of the companies in the United States' Transportation industry have price-to-sales ratios (or "P/S") below 1.3x, you may consider FTAI Infrastructure as a stock probably not worth researching with its 1.8x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the elevated P/S.

View our latest analysis for FTAI Infrastructure

How Has FTAI Infrastructure Performed Recently?

Recent times have been advantageous for FTAI Infrastructure 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.

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

Do Revenue Forecasts Match The High P/S Ratio?

There's an inherent assumption that a company should outperform the industry for P/S ratios like FTAI Infrastructure's to be considered reasonable.

If we review the last year of revenue growth, the company posted a terrific increase of 22%. Spectacularly, three year revenue growth has ballooned by several orders of magnitude, thanks in part to the last 12 months of revenue growth. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Shifting to the future, estimates from the one analyst covering the company suggest revenue should grow by 33% over the next year. That's shaping up to be materially higher than the 8.1% growth forecast for the broader industry.

With this in mind, it's not hard to understand why FTAI Infrastructure's P/S is high relative to its industry peers. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Bottom Line On FTAI Infrastructure's P/S

FTAI Infrastructure's P/S is on the rise since its shares have risen strongly. 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.

We've established that FTAI Infrastructure maintains its high P/S on the strength of its forecasted revenue growth being higher than the the rest of the Transportation industry, as expected. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.

It is also worth noting that we have found 3 warning signs for FTAI Infrastructure (2 are concerning!) that you need to take into consideration.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.