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    Local Bounti Corporation (NYSE:LOCL) Looks Just Right With A 38% Price Jump

    Simply Wall St·07/03/2025 10:52:04
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    Those holding Local Bounti Corporation (NYSE:LOCL) shares would be relieved that the share price has rebounded 38% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. But the gains over the last month weren't enough to make shareholders whole, as the share price is still down 4.7% in the last twelve months.

    Since its price has surged higher, given close to half the companies operating in the United States' Food industry have price-to-sales ratios (or "P/S") below 0.9x, you may consider Local Bounti as a stock to potentially avoid with its 1.5x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's as high as it is.

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    View our latest analysis for Local Bounti

    ps-multiple-vs-industry
    NYSE:LOCL Price to Sales Ratio vs Industry July 3rd 2025

    How Local Bounti Has Been Performing

    Local Bounti certainly has been doing a good job lately as it's been growing revenue more than most other companies. It seems that many are expecting the strong revenue performance to persist, which has raised the P/S. However, if this isn't the case, investors might get caught out paying too much for the stock.

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

    Do Revenue Forecasts Match The High P/S Ratio?

    The only time you'd be truly comfortable seeing a P/S as high as Local Bounti's is when the company's growth is on track to outshine the industry.

    If we review the last year of revenue growth, the company posted a terrific increase of 41%. The latest three year period has also seen an incredible overall rise in revenue, aided by its incredible short-term performance. Accordingly, shareholders would have been over the moon with those medium-term rates of revenue growth.

    Turning to the outlook, the next year should generate growth of 71% as estimated by the two analysts watching the company. With the industry only predicted to deliver 2.9%, the company is positioned for a stronger revenue result.

    In light of this, it's understandable that Local Bounti's P/S sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

    What Does Local Bounti's P/S Mean For Investors?

    Local Bounti's P/S is on the rise since its shares have risen strongly. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

    Our look into Local Bounti shows that its P/S ratio remains high on the merit of its strong future revenues. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.

    There are also other vital risk factors to consider and we've discovered 6 warning signs for Local Bounti (3 can't be ignored!) that you should be aware of before investing here.

    It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).