- MACOM Technology Solutions Holdings, Inc.’s current price-to-sales (P/S) ratio of 10.3x is higher than the average P/S ratios in the United States’ semiconductor industry, which hovers around 4.2x. Hence, buying MACOM’s stocks at a lower price is unlikely.
- Despite weaker revenue growth forecasts than industry averages, the company’s P/S ratio remains unaffected. This could pose a risk to shareholders and potential investors due to the risk of a share price drop.
The P/S ratio of MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) is currently high compared to the semiconductor industry’s average in the United States. Over the last year, MACOM’s revenue growth has been in decline, which deviates from the positive revenue growth seen by most other companies in the industry. This dip in revenue may be recovering, however, which could be keeping the P/S ratio from falling too much.
With the analysts’ estimates of a revenue growth rate of 9.2% annually over the next three years, the company’s future growth does not seem to match the industry’s projected annual expansion rate of 23%. This contrasts with the company’s past three-year revenue growth that was a respectable 22% in total, despite a 3.9% decline last year. It seems that investors are remaining bullish about the company’s prospects in spite of this, which could be keeping the stock price high.
This situation poses a considerable risk to shareholders and potential investors. A company with a P/S ratio as high as MACOM’s is typically expected to significantly outpace its industry’s growth. Despite sluggish revenue growth forecasts, the company’s P/S ratio remains high. If revenues don’t meet these high expectations, the share price could decline, and investors could potentially pay a high premium.
Further details about MACOM Technology Solutions Holdings, Inc. reveal that the company, along with its subsidiaries, designs and manufactures analog semiconductor solutions for wireless and wireline applications across a diverse range of spectrums. The company operates globally, with major installations in the United States, China, Australia, Japan, Malaysia, Singapore, South Korea, Taiwan, Thailand, and elsewhere.
Looking at the positives, the company’s earnings are forecasted to grow by 24.45% per year. However, there are risks, including significant insider selling over the past three months and profit margins of 14.1%, which are lower than the previous year’s margins of 64.8%.