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    Wolfspeed, Inc. (NYSE:WOLF) Looks Inexpensive After Falling 67% But Perhaps Not Attractive Enough

    Simply Wall St·06/15/2025 13:27:17
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    The Wolfspeed, Inc. (NYSE:WOLF) share price has fared very poorly over the last month, falling by a substantial 67%. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 95% loss during that time.

    Since its price has dipped substantially, Wolfspeed may look like a strong buying opportunity at present with its price-to-sales (or "P/S") ratio of 0.3x, considering almost half of all companies in the Semiconductor industry in the United States have P/S ratios greater than 3.6x and even P/S higher than 10x aren't out of the ordinary. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so limited.

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    View our latest analysis for Wolfspeed

    ps-multiple-vs-industry
    NYSE:WOLF Price to Sales Ratio vs Industry June 15th 2025

    What Does Wolfspeed's P/S Mean For Shareholders?

    Wolfspeed hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. Perhaps the P/S remains low as investors think the prospects of strong revenue growth aren't on the horizon. If you still like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

    Keen to find out how analysts think Wolfspeed's future stacks up against the industry? In that case, our free report is a great place to start.

    Do Revenue Forecasts Match The Low P/S Ratio?

    There's an inherent assumption that a company should far underperform the industry for P/S ratios like Wolfspeed's to be considered reasonable.

    Retrospectively, the last year delivered a frustrating 5.9% decrease to the company's top line. Regardless, revenue has managed to lift by a handy 15% in aggregate from three years ago, thanks to the earlier period of growth. So we can start by confirming that the company has generally done a good job of growing revenue over that time, even though it had some hiccups along the way.

    Shifting to the future, estimates from the nine analysts covering the company suggest revenue should grow by 9.8% over the next year. That's shaping up to be materially lower than the 30% growth forecast for the broader industry.

    With this in consideration, its clear as to why Wolfspeed's P/S is falling short industry peers. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

    What Does Wolfspeed's P/S Mean For Investors?

    Having almost fallen off a cliff, Wolfspeed's share price has pulled its P/S way down as well. 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.

    As we suspected, our examination of Wolfspeed's analyst forecasts revealed that its inferior revenue outlook is contributing to its low P/S. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. It's hard to see the share price rising strongly in the near future under these circumstances.

    There are also other vital risk factors to consider and we've discovered 4 warning signs for Wolfspeed (2 can't be ignored!) that you should be aware of before investing here.

    Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.