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华尔街日报Why Investors Shouldn't Be Surprised By Curis, Inc.'s (NASDAQ:CRIS) 27% Share Price Plunge
Unfortunately for some shareholders, the Curis, Inc. (NASDAQ:CRIS) share price has dived 27% in the last thirty days, prolonging recent pain. For any long-term shareholders, the last month ends a year to forget by locking in a 75% share price decline.
Since its price has dipped substantially, Curis' price-to-sales (or "P/S") ratio of 1.1x might make it look like a strong buy right now compared to the wider Biotechs industry in the United States, where around half of the companies have P/S ratios above 11.7x and even P/S above 83x are quite common. 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.
See our latest analysis for Curis
What Does Curis' Recent Performance Look Like?
With revenue growth that's inferior to most other companies of late, Curis has been relatively sluggish. The P/S ratio is probably low because investors think this lacklustre revenue performance isn't going to get any better. If you still like the company, you'd be hoping revenue doesn't get any worse and that you could pick up some stock while it's out of favour.
Keen to find out how analysts think Curis' future stacks up against the industry? In that case, our free report is a great place to start.How Is Curis' Revenue Growth Trending?
The only time you'd be truly comfortable seeing a P/S as depressed as Curis' is when the company's growth is on track to lag the industry decidedly.
Taking a look back first, we see that the company managed to grow revenues by a handy 14% last year. Revenue has also lifted 12% in aggregate from three years ago, partly thanks to the last 12 months of growth. So we can start by confirming that the company has actually done a good job of growing revenue over that time.
Looking ahead now, revenue is anticipated to climb by 43% per annum during the coming three years according to the five analysts following the company. With the industry predicted to deliver 118% growth each year, the company is positioned for a weaker revenue result.
With this in consideration, its clear as to why Curis' 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.
The Bottom Line On Curis' P/S
Curis' P/S looks about as weak as its stock price lately. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.
We've established that Curis maintains its low P/S on the weakness of its forecast growth being lower than the wider industry, as expected. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. The company will need a change of fortune to justify the P/S rising higher in the future.
You should always think about risks. Case in point, we've spotted 6 warning signs for Curis you should be aware of, and 3 of them are a bit unpleasant.
If these risks are making you reconsider your opinion on Curis, explore our interactive list of high quality stocks to get an idea of what else is out there.
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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.