Intuitive Machines, Inc. (NASDAQ:LUNR) shareholders would be excited to see that the share price has had a great month, posting a 47% gain and recovering from prior weakness. Unfortunately, despite the strong performance over the last month, the full year gain of 4.5% isn't as attractive.

Since its price has surged higher, when almost half of the companies in the United States' Aerospace & Defense industry have price-to-sales ratios (or "P/S") below 3.8x, you may consider Intuitive Machines as a stock not worth researching with its 9.5x P/S ratio. However, the P/S might be quite high for a reason and it requires further investigation to determine if it's justified.

What Does Intuitive Machines' Recent Performance Look Like?

Recent times haven't been great for Intuitive Machines as its revenue has been rising slower than most other companies. Perhaps the market is expecting future revenue performance to undergo a reversal of fortunes, which has elevated the P/S ratio. If not, then existing shareholders may be very nervous about the viability of the share price.

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

What Are Revenue Growth Metrics Telling Us About The High P/S?

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

Retrospectively, the last year delivered a decent 7.8% gain to the company's revenues. Pleasingly, revenue has also lifted 217% in aggregate from three years ago, partly thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing revenues over that time.

Shifting to the future, estimates from the five analysts covering the company suggest revenue should grow by 70% each year over the next three years. That's shaping up to be materially higher than the 15% each year growth forecast for the broader industry.

With this information, we can see why Intuitive Machines is trading at such a high P/S compared to the industry. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

What Does Intuitive Machines' P/S Mean For Investors?

The strong share price surge has lead to Intuitive Machines' P/S soaring as well. 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.

Our look into Intuitive Machines shows that its P/S ratio remains high on the merit of its strong future revenues. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. It's hard to see the share price falling strongly in the near future under these circumstances.

You need to take note of risks, for example - Intuitive Machines has 2 warning signs (and 1 which can't be ignored) we think you should know about.

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

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.