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    Alignment Healthcare, Inc. (NASDAQ:ALHC) Stock's 29% Dive Might Signal An Opportunity But It Requires Some Scrutiny

    Simply Wall St·05/14/2025 10:58:11
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    Alignment Healthcare, Inc. (NASDAQ:ALHC) shares have had a horrible month, losing 29% after a relatively good period beforehand. Of course, over the longer-term many would still wish they owned shares as the stock's price has soared 101% in the last twelve months.

    Even after such a large drop in price, you could still be forgiven for feeling indifferent about Alignment Healthcare's P/S ratio of 0.9x, since the median price-to-sales (or "P/S") ratio for the Healthcare industry in the United States is also close to 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.

    We've discovered 1 warning sign about Alignment Healthcare. View them for free.

    View our latest analysis for Alignment Healthcare

    ps-multiple-vs-industry
    NasdaqGS:ALHC Price to Sales Ratio vs Industry May 14th 2025

    How Has Alignment Healthcare Performed Recently?

    Recent times have been advantageous for Alignment Healthcare as its revenues have been rising faster than most other companies. It might be that many expect the strong revenue performance to wane, which has kept the P/S ratio from rising. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

    Want the full picture on analyst estimates for the company? Then our free report on Alignment Healthcare will help you uncover what's on the horizon.

    Do Revenue Forecasts Match The P/S Ratio?

    There's an inherent assumption that a company should be matching the industry for P/S ratios like Alignment Healthcare's to be considered reasonable.

    Taking a look back first, we see that the company grew revenue by an impressive 49% last year. The latest three year period has also seen an excellent 141% overall rise in revenue, aided by its short-term performance. So we can start by confirming that the company has done a great job of growing revenue over that time.

    Turning to the outlook, the next three years should generate growth of 27% per annum as estimated by the ten analysts watching the company. With the industry only predicted to deliver 8.0% per year, the company is positioned for a stronger revenue result.

    With this in consideration, we find it intriguing that Alignment Healthcare'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 Key Takeaway

    Following Alignment Healthcare's share price tumble, its P/S is just clinging on to the industry median P/S. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

    Despite enticing revenue growth figures that outpace the industry, Alignment Healthcare's P/S isn't quite what we'd expect. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. It appears some are indeed anticipating revenue instability, because these conditions should normally provide a boost to the share price.

    Don't forget that there may be other risks. For instance, we've identified 1 warning sign for Alignment Healthcare that you should be aware of.

    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.