Veru Inc.'s (NASDAQ:VERU) 28% Share Price Surge Not Quite Adding Up

Simply Wall St · 06/10 10:10

Veru Inc. (NASDAQ:VERU) shareholders have had their patience rewarded with a 28% share price jump in the last month. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 28% in the last twelve months.

In spite of the firm bounce in price, you could still be forgiven for feeling indifferent about Veru's P/S ratio of 5.6x, since the median price-to-sales (or "P/S") ratio for the Pharmaceuticals industry in the United States is also close to 5x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

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View our latest analysis for Veru

ps-multiple-vs-industry
NasdaqCM:VERU Price to Sales Ratio vs Industry June 10th 2025

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

With revenue growth that's superior to most other companies of late, Veru has been doing relatively well. Perhaps the market is expecting this level of performance to taper off, keeping the P/S from soaring. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Veru.

Is There Some Revenue Growth Forecasted For Veru?

The only time you'd be comfortable seeing a P/S like Veru's is when the company's growth is tracking the industry closely.

Taking a look back first, we see that the company grew revenue by an impressive 134% last year. However, this wasn't enough as the latest three year period has seen the company endure a nasty 72% drop in revenue in aggregate. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenues over that time.

Turning to the outlook, the next three years should generate growth of 5.6% each year as estimated by the four analysts watching the company. With the industry predicted to deliver 19% growth per annum, the company is positioned for a weaker revenue result.

With this in mind, we find it intriguing that Veru's P/S is closely matching its industry peers. Apparently many investors in the company are less bearish than analysts indicate and aren't willing to let go of their stock right now. These shareholders may be setting themselves up for future disappointment if the P/S falls to levels more in line with the growth outlook.

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What We Can Learn From Veru's P/S?

Its shares have lifted substantially and now Veru's P/S is back within range of the industry median. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

Given that Veru's revenue growth projections are relatively subdued in comparison to the wider industry, it comes as a surprise to see it trading at its current P/S ratio. When we see companies with a relatively weaker revenue outlook compared to the industry, we suspect the share price is at risk of declining, sending the moderate P/S lower. Circumstances like this present a risk to current and prospective investors who may see share prices fall if the low revenue growth impacts the sentiment.

Plus, you should also learn about these 4 warning signs we've spotted with Veru (including 1 which is significant).

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).