ThermoGenesis Holdings, Inc. (NASDAQ:THMO) Stock's 52% Dive Might Signal An Opportunity But It Requires Some Scrutiny
ThermoGenesis Holdings, Inc. (NASDAQ:THMO) shareholders won't be pleased to see that the share price has had a very rough month, dropping 52% and undoing the prior period's positive performance. For any long-term shareholders, the last month ends a year to forget by locking in a 90% share price decline.
Following the heavy fall in price, ThermoGenesis Holdings may look like a strong buying opportunity at present with its price-to-sales (or "P/S") ratio of 0.4x, considering almost half of all companies in the Medical Equipment industry in the United States have P/S ratios greater than 3.5x and even P/S higher than 8x aren't out of the ordinary. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly reduced P/S.
View our latest analysis for ThermoGenesis Holdings
How ThermoGenesis Holdings Has Been Performing
With revenue growth that's superior to most other companies of late, ThermoGenesis Holdings has been doing relatively well. It might be that many expect the strong revenue performance to degrade substantially, which has repressed the share price, and thus the P/S ratio. If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.
If you'd like to see what analysts are forecasting going forward, you should check out our free report on ThermoGenesis Holdings.
Is There Any Revenue Growth Forecasted For ThermoGenesis Holdings?
The only time you'd be truly comfortable seeing a P/S as depressed as ThermoGenesis Holdings' is when the company's growth is on track to lag the industry decidedly.
If we review the last year of revenue growth, the company posted a worthy increase of 13%. Ultimately though, it couldn't turn around the poor performance of the prior period, with revenue shrinking 20% in total over the last three years. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.
Looking ahead now, revenue is anticipated to climb by 41% per year during the coming three years according to the one analyst following the company. With the industry only predicted to deliver 8.9% per annum, the company is positioned for a stronger revenue result.
In light of this, it's peculiar that ThermoGenesis Holdings' P/S sits below the majority of other companies. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.
The Bottom Line On ThermoGenesis Holdings' P/S
Shares in ThermoGenesis Holdings have plummeted and its P/S has followed suit. 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.
ThermoGenesis Holdings' analyst forecasts revealed that its superior revenue outlook isn't contributing to its P/S anywhere near as much as we would have predicted. There could be some major risk factors that are placing downward pressure on the P/S ratio. It appears the market could be anticipating revenue instability, because these conditions should normally provide a boost to the share price.
Before you take the next step, you should know about the 4 warning signs for ThermoGenesis Holdings that we have uncovered.
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.
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