With a drop in a price of 37% for Terawulf Inc. (Nasdaq: Wulf) you still get what you pay for which you pay for

The Terawulf Inc. (NASDAQ: Wulf) The share price lasted very badly last month and decreased by 37%. If you look at the overall picture, the stock rose by 69%even after this bad month last year.

Despite the strong drop in price, the price-to-sales ratio of Terawulf (or “P/s”) of 11.8x could still look like a strong sale compared to other companies in the software industry in the USA, where round Half of the companies P/S conditions below 5.6 times and even P/S has 2x. It is not advisable to only take the P/S to the nominal value, as there can be an explanation of why it is so high.

Take a look at our latest analysis for Terawulf

What does Terawulfs P/S mean for shareholders?

The recent times have been advantageous for Terawulf because the income rose faster than most other companies. It seems that many expect the strong sales performance that the P/S has increased. However, if this is not the case, investors may be paid too much for the share.

If you want to see which analysts predict in the future, you should be ours free Report on Terawulf.

What do we tell us sales growth indicators about the high P/S?

The only time that you feel really comfortable when a P/S is as steep as terawulf is when the company’s growth is on the right track to exceed the industry.

We can see each other back and see that the company rose by an impressive 131% last year. Although his long -term performance was not so strong and three years of sales growth overall does not exist relatively. It is therefore fair to say that sales growth has recently been inconsistent for the company.

If you are postponed to the future, the estimates of the nine analysts that cover the company suggest that sales should increase by 60% per year in the next three years. Since the industry is only predicted that they deliver 20% each year, the company is positioned for a stronger sales result.

In this sense, it is not difficult to understand why Terawulfs P/S is high in relation to his industry colleagues. Apparently the shareholders are not interested in deriving something that may have a more successful future in mind.

The most important snack bar

The Terawulf shares may have suffered, but his P/S remains high. In general, it is our preference to limit the use of the price-to-sales ratio to the determination of the market, which the market thinks about the general health of a company.

Our view of Terawulf shows that his P/S ratio will continue to be high in earning its strong future income. The shareholders are currently familiar with the P/S because they are confident that future income is not threatened. It is difficult to see that the share price falls greatly under these circumstances in the near future.

Still, be aware Terawulf shows 3 warning signs In our investment analysis, 2 of them are not so good for us.

When companies with solid profit growth have been in their alley in the pastYou might want to see this free Collection of other companies with strong profit growth and low P/E conditions.

Have feedback on this article? Worried about the content? Contact directly with us. Alternatively, email editorial team (at) simplywallst.com.

This article by Simply Wall Street is a general nature. We offer comments based on historical data and analyst forecasts that only use an impartial methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell shares, and does not take into account your goals or your financial situation. We would like to use a long -term focused analysis by basic data. Note that our analysis may not take into account the latest record -sensitive announcements or qualitative material. Simply Wall Street has no position in the stocks mentioned.