Not Many Are Piling Into Aspen Aerogels, Inc. (NYSE:ASPN) Stock Yet As It Plummets 30%

To the annoyance of some shareholders, Aspen Aerogels, Inc. (NYSE:ASPN) shares are down a considerable 30% 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 66% loss during that time.

Even after such a large drop in price, there still wouldn't be many who think Aspen Aerogels' price-to-sales (or "P/S") ratio of 0.9x is worth a mention when the median P/S in the United States' Chemicals industry is similar at about 1x. 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 Aspen Aerogels

How Has Aspen Aerogels Performed Recently?

Recent times have been advantageous for Aspen Aerogels as its revenues have been rising faster 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 the company manages to stay the course, then investors should be rewarded with a share price that matches its revenue figures.

How Is Aspen Aerogels' Revenue Growth Trending?

Aspen Aerogels' P/S ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the industry.

Retrospectively, the last year delivered an exceptional 90% gain to the company's top line. The latest three year period has also seen an excellent 272% overall rise in revenue, aided by its short-term performance. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 16% per year during the coming three years according to the seven analysts following the company. That's shaping up to be materially higher than the 4.4% per annum growth forecast for the broader industry.

With this in consideration, we find it intriguing that Aspen Aerogels' P/S is closely matching its industry peers. It may be that most investors aren't convinced the company can achieve future growth expectations.

What We Can Learn From Aspen Aerogels' P/S?

With its share price dropping off a cliff, the P/S for Aspen Aerogels looks to be in line with the rest of the Chemicals industry. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

Despite enticing revenue growth figures that outpace the industry, Aspen Aerogels' 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. This uncertainty seems to be reflected in the share price which, while stable, could be higher given the revenue forecasts.

You should always think about risks. Case in point, we've spotted 1 warning sign for Aspen Aerogels you should be aware of.

If you're unsure about the strength of Aspen Aerogels' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.