With A 27% Price Drop For Freight Technologies, Inc. (NASDAQ:FRGT) You'll Still Get What You Pay For

Unfortunately for some shareholders, the Freight Technologies, Inc. (NASDAQ:FRGT) share price has dived 27% in the last thirty days, prolonging recent pain. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 91% loss during that time.

In spite of the heavy fall in price, when almost half of the companies in the United States' Logistics industry have price-to-sales ratios (or "P/S") below 0.6x, you may still consider Freight Technologies as a stock not worth researching with its 4.8x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.

See our latest analysis for Freight Technologies

What Does Freight Technologies' Recent Performance Look Like?

Recent times haven't been great for Freight Technologies as its revenue has been falling quicker than most other companies. It might be that many expect the dismal revenue performance to recover substantially, which has kept the P/S from collapsing. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

Want the full picture on analyst estimates for the company? Then our free report on Freight Technologies will help you uncover what's on the horizon.

Is There Enough Revenue Growth Forecasted For Freight Technologies?

In order to justify its P/S ratio, Freight Technologies would need to produce outstanding growth that's well in excess of the industry.

Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 20%. However, a few very strong years before that means that it was still able to grow revenue by an impressive 287% in total over the last three years. So we can start by confirming that the company has generally done a very good job of growing revenue over that time, even though it had some hiccups along the way.

Shifting to the future, estimates from the sole analyst covering the company suggest revenue should grow by 71% over the next year. Meanwhile, the rest of the industry is forecast to only expand by 3.1%, which is noticeably less attractive.

With this information, we can see why Freight Technologies is trading at such a high P/S compared to the industry. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

The Bottom Line On Freight Technologies' P/S

A significant share price dive has done very little to deflate Freight Technologies' very lofty P/S. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

Our look into Freight Technologies shows that its P/S ratio remains high on the merit of its strong future revenues. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. Unless these conditions change, they will continue to provide strong support to the share price.

Having said that, be aware Freight Technologies is showing 5 warning signs in our investment analysis, and 2 of those are significant.

If you're unsure about the strength of Freight Technologies' 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.