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    Synaptics Incorporated's (NASDAQ:SYNA) 26% Dip In Price Shows Sentiment Is Matching Revenues

    Simply Wall St·04/17/2025 10:01:37
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    To the annoyance of some shareholders, Synaptics Incorporated (NASDAQ:SYNA) shares are down a considerable 26% in the last month, which continues a horrid run for the company. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 42% share price drop.

    Since its price has dipped substantially, Synaptics may be sending bullish signals at the moment with its price-to-sales (or "P/S") ratio of 1.9x, since almost half of all companies in the Semiconductor industry in the United States have P/S ratios greater than 2.8x and even P/S higher than 7x are not unusual. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

    Our free stock report includes 2 warning signs investors should be aware of before investing in Synaptics. Read for free now.

    Check out our latest analysis for Synaptics

    ps-multiple-vs-industry
    NasdaqGS:SYNA Price to Sales Ratio vs Industry April 17th 2025

    How Synaptics Has Been Performing

    Synaptics hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. Perhaps the P/S remains low as investors think the prospects of strong revenue growth aren't on the horizon. If you still 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 Synaptics' 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 Synaptics?

    The only time you'd be truly comfortable seeing a P/S as low as Synaptics' is when the company's growth is on track to lag the industry.

    Retrospectively, the last year delivered a frustrating 2.1% decrease to the company's top line. As a result, revenue from three years ago have also fallen 30% overall. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

    Shifting to the future, estimates from the nine analysts covering the company suggest revenue should grow by 11% over the next year. Meanwhile, the rest of the industry is forecast to expand by 37%, which is noticeably more attractive.

    In light of this, it's understandable that Synaptics' P/S sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

    The Key Takeaway

    Synaptics' P/S has taken a dip along with its share price. 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.

    As we suspected, our examination of Synaptics' analyst forecasts revealed that its inferior revenue outlook is contributing to its low P/S. Shareholders' pessimism on the revenue prospects for the company seems to be the main contributor to the depressed P/S. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.

    Before you settle on your opinion, we've discovered 2 warning signs for Synaptics (1 can't be ignored!) that you should be aware of.

    If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.