Positive Sentiment Still Eludes AIRO Group Holdings, Inc. (NASDAQ:AIRO) Following 28% Share Price Slump
To the annoyance of some shareholders, AIRO Group Holdings, Inc. (NASDAQ:AIRO) shares are down a considerable 28% in the last month, which continues a horrid run for the company. To make matters worse, the recent drop has wiped out a year's worth of gains with the share price now back where it started a year ago.
In spite of the heavy fall in price, there still wouldn't be many who think AIRO Group Holdings' price-to-sales (or "P/S") ratio of 2.8x is worth a mention when the median P/S in the United States' Aerospace & Defense industry is similar at about 2.9x. 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.
See our latest analysis for AIRO Group Holdings
What Does AIRO Group Holdings' P/S Mean For Shareholders?
AIRO Group Holdings certainly has been doing a good job lately as it's been growing revenue more than most other companies. One possibility is that the P/S ratio is moderate because investors think this strong revenue performance might be about to tail off. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's not quite in favour.
Want the full picture on analyst estimates for the company? Then our free report on AIRO Group Holdings will help you uncover what's on the horizon.Is There Some Revenue Growth Forecasted For AIRO Group Holdings?
There's an inherent assumption that a company should be matching the industry for P/S ratios like AIRO Group Holdings' to be considered reasonable.
If we review the last year of revenue growth, the company posted a terrific increase of 41%. 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.
Looking ahead now, revenue is anticipated to climb by 51% per annum during the coming three years according to the three analysts following the company. Meanwhile, the rest of the industry is forecast to only expand by 14% per year, which is noticeably less attractive.
In light of this, it's curious that AIRO Group Holdings' P/S sits in line with the majority of other companies. It may be that most investors aren't convinced the company can achieve future growth expectations.
What We Can Learn From AIRO Group Holdings' P/S?
AIRO Group Holdings' plummeting stock price has brought its P/S back to a similar region as the rest of the industry. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.
Despite enticing revenue growth figures that outpace the industry, AIRO Group Holdings' P/S isn't quite what we'd expect. When we see a strong revenue outlook, with growth outpacing the industry, we can only assume potential uncertainty around these figures are what might be placing slight pressure on the P/S ratio. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.
Plus, you should also learn about this 1 warning sign we've spotted with AIRO Group Holdings.
It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).
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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.