Despite an already strong run, loanDepot, Inc. (NYSE:LDI) shares have been powering on, with a gain of 29% in the last thirty days. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 16% in the last twelve months.

In spite of the firm bounce in price, loanDepot's price-to-sales (or "P/S") ratio of 0.3x might still make it look like a strong buy right now compared to the wider Diversified Financial industry in the United States, where around half of the companies have P/S ratios above 2.8x and even P/S above 6x are quite common. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly reduced P/S.

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Check out our latest analysis for loanDepot

How Has loanDepot Performed Recently?

With revenue growth that's superior to most other companies of late, loanDepot has been doing relatively well. Perhaps the market is expecting future revenue performance to dive, which has kept the P/S suppressed. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

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

Is There Any Revenue Growth Forecasted For loanDepot?

There's an inherent assumption that a company should far underperform the industry for P/S ratios like loanDepot's to be considered reasonable.

Taking a look back first, we see that the company grew revenue by an impressive 21% last year. Still, revenue has fallen 66% in total from three years ago, which is quite disappointing. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

Shifting to the future, estimates from the five analysts covering the company suggest revenue should grow by 20% over the next year. That's shaping up to be materially higher than the 3.0% growth forecast for the broader industry.

With this information, we find it odd that loanDepot is trading at a P/S lower than the industry. It looks like most investors are not convinced at all that the company can achieve future growth expectations.

The Key Takeaway

loanDepot's recent share price jump still sees fails to bring its P/S alongside the industry median. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

loanDepot's analyst forecasts revealed that its superior revenue outlook isn't contributing to its P/S anywhere near as much as we would have predicted. The reason for this depressed P/S could potentially be found in the risks the market is pricing in. At least price risks look to be very low, but investors seem to think future revenues could see a lot of volatility.

And what about other risks? Every company has them, and we've spotted 1 warning sign for loanDepot you should know about.

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

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