Market Cool On Benson Hill, Inc.'s (NYSE:BHIL) Revenues Pushing Shares 28% Lower
To the annoyance of some shareholders, Benson Hill, Inc. (NYSE:BHIL) shares are down a considerable 28% in the last month, which continues a horrid run for the company. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 74% loss during that time.
Although its price has dipped substantially, it's still not a stretch to say that Benson Hill's price-to-sales (or "P/S") ratio of 0.6x right now seems quite "middle-of-the-road" compared to the Food industry in the United States, where the median P/S ratio is around 0.9x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.
Check out our latest analysis for Benson Hill
What Does Benson Hill's Recent Performance Look Like?
Recent times haven't been great for Benson Hill as its revenue has been rising slower than most other companies. One possibility is that the P/S ratio is moderate because investors think this lacklustre revenue performance will turn around. If not, then existing shareholders may be a little nervous about the viability of the share price.
If you'd like to see what analysts are forecasting going forward, you should check out our free report on Benson Hill.
Is There Some Revenue Growth Forecasted For Benson Hill?
In order to justify its P/S ratio, Benson Hill would need to produce growth that's similar to the industry.
If we review the last year of revenue growth, we see the company's revenues grew exponentially. Spectacularly, three year revenue growth has also set the world alight, thanks to the last 12 months of incredible growth. Accordingly, shareholders would have been over the moon with those medium-term rates of revenue growth.
Shifting to the future, estimates from the five analysts covering the company suggest revenue should grow by 5.8% per annum over the next three years. Meanwhile, the rest of the industry is forecast to only expand by 3.3% per annum, which is noticeably less attractive.
With this information, we find it interesting that Benson Hill is trading at a fairly similar P/S compared to the industry. It may be that most investors aren't convinced the company can achieve future growth expectations.
What We Can Learn From Benson Hill's P/S?
With its share price dropping off a cliff, the P/S for Benson Hill looks to be in line with the rest of the Food industry. 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.
Looking at Benson Hill's analyst forecasts revealed that its superior revenue outlook isn't giving the boost to its P/S that we would've expected. 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. It appears some are indeed anticipating revenue instability, because these conditions should normally provide a boost to the share price.
You should always think about risks. Case in point, we've spotted 3 warning signs for Benson Hill you should be aware of.
If these risks are making you reconsider your opinion on Benson Hill, explore our interactive list of high quality stocks to get an idea of what else is out there.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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