Benign Growth For STRATA Skin Sciences, Inc. (NASDAQ:SSKN) Underpins Its Share Price

Simply Wall St · 07/03 10:23

With a price-to-sales (or "P/S") ratio of 0.3x STRATA Skin Sciences, Inc. (NASDAQ:SSKN) may be sending very bullish signals at the moment, given that almost half of all the Medical Equipment companies in the United States have P/S ratios greater than 2.8x and even P/S higher than 7x are not unusual. 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.

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View our latest analysis for STRATA Skin Sciences

ps-multiple-vs-industry
NasdaqCM:SSKN Price to Sales Ratio vs Industry July 3rd 2025

How STRATA Skin Sciences Has Been Performing

STRATA Skin Sciences could be doing better as it's been growing revenue less than most other companies lately. The P/S ratio is probably low because investors think this lacklustre revenue performance isn't going to get any better. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

Keen to find out how analysts think STRATA Skin Sciences' future stacks up against the industry? In that case, our free report is a great place to start.

How Is STRATA Skin Sciences' Revenue Growth Trending?

STRATA Skin Sciences' P/S ratio would be typical for a company that's expected to deliver very poor growth or even falling revenue, and importantly, perform much worse than the industry.

If we review the last year of revenue growth, the company posted a worthy increase of 3.3%. The latest three year period has also seen a 7.8% overall rise in revenue, aided somewhat by its short-term performance. Therefore, it's fair to say the revenue growth recently has been respectable for the company.

Shifting to the future, estimates from the dual analysts covering the company suggest revenue should grow by 3.5% over the next year. That's shaping up to be materially lower than the 9.5% growth forecast for the broader industry.

In light of this, it's understandable that STRATA Skin Sciences' P/S sits below the majority of other companies. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.

The Bottom Line On STRATA Skin Sciences' P/S

While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

As we suspected, our examination of STRATA Skin Sciences' analyst forecasts revealed that its inferior revenue outlook is contributing to its low P/S. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.

Having said that, be aware STRATA Skin Sciences is showing 3 warning signs in our investment analysis, and 1 of those doesn't sit too well with us.

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