Marpai, Inc. (NASDAQ:MRAI) Looks Just Right With A 116% Price Jump
Marpai, Inc. (NASDAQ:MRAI) shareholders have had their patience rewarded with a 116% share price jump in the last month. Looking back a bit further, it's encouraging to see the stock is up 39% in the last year.
After such a large jump in price, you could be forgiven for thinking Marpai is a stock not worth researching with a price-to-sales ratios (or "P/S") of 1.6x, considering almost half the companies in the United States' Insurance industry 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 elevated P/S.
See our latest analysis for Marpai
What Does Marpai's Recent Performance Look Like?
Marpai certainly has been doing a good job lately as it's been growing revenue more than most other companies. It seems that many are expecting the strong revenue performance to persist, which has raised the P/S. If not, then existing shareholders might 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 Marpai.
What Are Revenue Growth Metrics Telling Us About The High P/S?
The only time you'd be truly comfortable seeing a P/S as high as Marpai's is when the company's growth is on track to outshine the industry.
Taking a look back first, we see that the company grew revenue by an impressive 71% last year. Still, revenue has barely risen at all from three years ago in total, which is not ideal. So it appears to us that the company has had a mixed result in terms of growing revenue over that time.
Turning to the outlook, the next year should generate growth of 42% as estimated by the lone analyst watching the company. Meanwhile, the rest of the industry is forecast to only expand by 7.6%, which is noticeably less attractive.
In light of this, it's understandable that Marpai's P/S sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.
The Key Takeaway
The large bounce in Marpai's shares has lifted the company's P/S handsomely. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.
Our look into Marpai shows that its P/S ratio remains high on the merit of its strong future revenues. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. Unless these conditions change, they will continue to provide strong support to the share price.
Plus, you should also learn about these 5 warning signs we've spotted with Marpai (including 2 which are a bit unpleasant).
If these risks are making you reconsider your opinion on Marpai, 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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