There wouldn't be many who think Capitol Health Limited's (ASX:CAJ) price-to-sales (or "P/S") ratio of 1.2x is worth a mention when the median P/S for the Healthcare industry in Australia is similar at about 1.1x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

Check out our latest analysis for Capitol Health

How Has Capitol Health Performed Recently?

Recent times have been pleasing for Capitol Health as its revenue has risen in spite of the industry's average revenue going into reverse. Perhaps the market is expecting its current strong performance to taper off in accordance to the rest of the industry, which has kept the P/S contained. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

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

How Is Capitol Health's Revenue Growth Trending?

In order to justify its P/S ratio, Capitol Health would need to produce growth that's similar to the industry.

If we review the last year of revenue growth, the company posted a worthy increase of 14%. The latest three year period has also seen an excellent 36% overall rise in revenue, aided somewhat by its short-term performance. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Looking ahead now, revenue is anticipated to climb by 7.5% per year during the coming three years according to the eight analysts following the company. Meanwhile, the rest of the industry is forecast to expand by 7.2% per annum, which is not materially different.

In light of this, it's understandable that Capitol Health's P/S sits in line with the majority of other companies. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

What We Can Learn From Capitol Health's P/S?

We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

We've seen that Capitol Health maintains an adequate P/S seeing as its revenue growth figures match the rest of the industry. Right now shareholders are comfortable with the P/S as they are quite confident future revenue won't throw up any surprises. If all things remain constant, the possibility of a drastic share price movement remains fairly remote.