With a price-to-sales (or \"P/S\") ratio of 3x i3 Verticals, Inc. (NASDAQ:IIIV) may be sending bullish signals at the moment, given that almost half of all the Software companies in the United States have P/S ratios greater than 4.9x and even P/S higher than 12x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S. \n\nWith revenue growth that's inferior to most other companies of late, i3 Verticals has been relatively sluggish. The P/S ratio is probably low because investors think this lacklustre revenue performance isn't going to get any better. If you still like the company, you'd be hoping revenue doesn't get any worse and that you could pick up some stock while it's out of favour. \n\ni3 Verticals' P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry. \n\nRetrospectively, the last year delivered a decent 9.1% gain to the company's revenues. Ultimately though, it couldn't turn around the poor performance of the prior period, with revenue shrinking 17% in total over the last three years. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time. \n\nLooking ahead now, revenue is anticipated to slump, contracting by 9.5% during the coming year according to the five analysts following the company. Meanwhile, the broader industry is forecast to expand by 20%, which paints a poor picture. \n\nIn light of this, it's understandable that i3 Verticals' P/S would sit below the majority of other companies. However, shrinking revenues are unlikely to lead to a stable P/S over the longer term. There's potential for the P/S to fall to even lower levels if the company doesn't improve its top-line growth. \n\nIt'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. \n\nWith revenue forecasts that are inferior to the rest of the industry, it's no surprise that i3 Verticals' P/S is on the lower end of the spectrum. 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. \n\nHaving said that, be aware i3 Verticals is showing 1 warning sign in our investment analysis, you should know about. \n\ni3 Verticals, Inc. builds, acquires, and grows software solutions in the public sector and healthcare vertical markets in the United States and Canada. \n\nExcellent balance sheet with moderate growth potential.

i3 Verticals, Inc.'s (NASDAQ:IIIV) Shares Lagging The Industry But So Is The Business

i3 Verticals, Inc. (NASDAQ:IIIV) has a price-to-sales (P/S) ratio of 3x, which is below the industry average, as most U.S. software companies have P/S ratios above 4.9x, with some exceeding 12x. Despite this, the company's revenue growth has been sluggish, with a 17% decline over the last three years and an expected 9.5% contraction in the coming year, compared to a projected 20% industry growth. The low P/S ratio reflects investor skepticism about future revenue performance. The company operates in the public sector and healthcare software markets in the United States and Canada, and maintains an excellent balance sheet with moderate growth potential. It currently has one warning sign in its investment analysis.