Yahoo Finance Investors Still Aren't Entirely Convinced By Maxeon Solar Technologies, Ltd.'s (NASDAQ:MAXN) Revenues Despite 25% Price Jump
The Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN) share price has done very well over the last month, posting an excellent gain of 25%. The annual gain comes to 113% following the latest surge, making investors sit up and take notice.
In spite of the firm bounce in price, Maxeon Solar Technologies may still look like a strong buying opportunity at present with its price-to-sales (or "P/S") ratio of 1.2x, considering almost half of all companies in the Semiconductor industry in the United States have P/S ratios greater than 3.3x and even P/S higher than 7x aren't out of the ordinary. However, the P/S might be quite low for a reason and it requires further investigation to determine if it's justified.
View our latest analysis for Maxeon Solar Technologies
How Has Maxeon Solar Technologies Performed Recently?
Maxeon Solar Technologies 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 low because investors think this strong revenue performance might be less impressive moving forward. If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.
Keen to find out how analysts think Maxeon Solar Technologies' future stacks up against the industry? In that case, our free report is a great place to start.
Is There Any Revenue Growth Forecasted For Maxeon Solar Technologies?
In order to justify its P/S ratio, Maxeon Solar Technologies would need to produce anemic growth that's substantially trailing the industry.
If we review the last year of revenue growth, the company posted a terrific increase of 35%. Despite this strong recent growth, it's still struggling to catch up as its three-year revenue frustratingly shrank by 12% overall. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenues over that time.
Turning to the outlook, the next year should generate growth of 39% as estimated by the six analysts watching the company. With the industry only predicted to deliver 0.9%, the company is positioned for a stronger revenue result.
With this information, we find it odd that Maxeon Solar Technologies is trading at a P/S lower than the industry. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.
What We Can Learn From Maxeon Solar Technologies' P/S?
Maxeon Solar Technologies' recent share price jump still sees fails to bring its P/S alongside the industry median. 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.
To us, it seems Maxeon Solar Technologies currently trades on a significantly depressed P/S given its forecasted revenue growth is higher than the rest of its industry. 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.
There are also other vital risk factors to consider before investing and we've discovered 2 warning signs for Maxeon Solar Technologies that you should be aware of.
If these risks are making you reconsider your opinion on Maxeon Solar Technologies, explore our interactive list of high quality stocks to get an idea of what else is out there.
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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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