Dogness (International) Corporation's (NASDAQ:DOGZ) 36% Dip Still Leaving Some Shareholders Feeling Restless Over Its P/SRatio

Simply Wall St · 07/01 10:09

The Dogness (International) Corporation (NASDAQ:DOGZ) share price has fared very poorly over the last month, falling by a substantial 36%. The recent drop has obliterated the annual return, with the share price now down 2.0% over that longer period.

Although its price has dipped substantially, you could still be forgiven for thinking Dogness (International) is a stock to steer clear of with a price-to-sales ratios (or "P/S") of 10.3x, considering almost half the companies in the United States' Luxury industry have P/S ratios below 0.5x. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.

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Check out our latest analysis for Dogness (International)

ps-multiple-vs-industry
NasdaqCM:DOGZ Price to Sales Ratio vs Industry July 1st 2025

What Does Dogness (International)'s P/S Mean For Shareholders?

Recent times have been quite advantageous for Dogness (International) as its revenue has been rising very briskly. Perhaps the market is expecting future revenue performance to outperform the wider market, which has seemingly got people interested in the stock. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on Dogness (International)'s earnings, revenue and cash flow.

How Is Dogness (International)'s Revenue Growth Trending?

In order to justify its P/S ratio, Dogness (International) would need to produce outstanding growth that's well in excess of the industry.

Taking a look back first, we see that the company grew revenue by an impressive 46% last year. However, this wasn't enough as the latest three year period has seen the company endure a nasty 33% drop in revenue in aggregate. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.

Comparing that to the industry, which is predicted to deliver 4.4% growth in the next 12 months, the company's downward momentum based on recent medium-term revenue results is a sobering picture.

With this information, we find it concerning that Dogness (International) is trading at a P/S higher than the industry. It seems most investors are ignoring the recent poor growth rate and are hoping for a turnaround in the company's business prospects. Only the boldest would assume these prices are sustainable as a continuation of recent revenue trends is likely to weigh heavily on the share price eventually.

The Key Takeaway

Even after such a strong price drop, Dogness (International)'s P/S still exceeds the industry median significantly. 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 Dogness (International) currently trades on a much higher than expected P/S since its recent revenues have been in decline over the medium-term. When we see revenue heading backwards and underperforming the industry forecasts, we feel the possibility of the share price declining is very real, bringing the P/S back into the realm of reasonability. Should recent medium-term revenue trends persist, it would pose a significant risk to existing shareholders' investments and prospective investors will have a hard time accepting the current value of the stock.

Before you take the next step, you should know about the 2 warning signs for Dogness (International) (1 is a bit unpleasant!) that we have uncovered.

If these risks are making you reconsider your opinion on Dogness (International), explore our interactive list of high quality stocks to get an idea of what else is out there.