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    The Market Lifts Gaia, Inc. (NASDAQ:GAIA) Shares 35% But It Can Do More

    Simply Wall St·04/29/2025 18:56:06
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    Those holding Gaia, Inc. (NASDAQ:GAIA) shares would be relieved that the share price has rebounded 35% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. Taking a wider view, although not as strong as the last month, the full year gain of 22% is also fairly reasonable.

    In spite of the firm bounce in price, there still wouldn't be many who think Gaia's price-to-sales (or "P/S") ratio of 1.4x is worth a mention when the median P/S in the United States' Entertainment industry is similar at about 1.2x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

    We check all companies for important risks. See what we found for Gaia in our free report.

    See our latest analysis for Gaia

    ps-multiple-vs-industry
    NasdaqGM:GAIA Price to Sales Ratio vs Industry April 29th 2025

    What Does Gaia's Recent Performance Look Like?

    Recent revenue growth for Gaia has been in line with the industry. The P/S ratio is probably moderate because investors think this modest revenue performance will continue. If you like the company, you'd be hoping this can at least be maintained so that you could pick up some stock while it's not quite in favour.

    If you'd like to see what analysts are forecasting going forward, you should check out our free report on Gaia.

    Is There Some Revenue Growth Forecasted For Gaia?

    The only time you'd be comfortable seeing a P/S like Gaia's is when the company's growth is tracking the industry closely.

    Taking a look back first, we see that the company managed to grow revenues by a handy 12% last year. The latest three year period has also seen a 14% overall rise in revenue, aided somewhat by its short-term performance. Therefore, it's fair to say the revenue growth recently has been respectable for the company.

    Shifting to the future, estimates from the four analysts covering the company suggest revenue should grow by 18% per annum over the next three years. That's shaping up to be materially higher than the 12% per year growth forecast for the broader industry.

    With this in consideration, we find it intriguing that Gaia's P/S is closely matching its industry peers. Apparently some shareholders are skeptical of the forecasts and have been accepting lower selling prices.

    The Bottom Line On Gaia's P/S

    Gaia appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the 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, Gaia's P/S isn't quite what we'd expect. There could be some risks that the market is pricing in, which is preventing the P/S ratio from matching the positive outlook. However, if you agree with the analysts' forecasts, you may be able to pick up the stock at an attractive price.

    Many other vital risk factors can be found on the company's balance sheet. Our free balance sheet analysis for Gaia with six simple checks will allow you to discover any risks that could be an issue.

    If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.