Price to Sales Ratio Calculator
Calculate P/S ratio to evaluate stock valuation and identify undervalued opportunities
Calculate P/S Ratio
Trailing twelve months revenue
Current market price per share
Total number of shares outstanding
From income statement - annual revenue or sales
P/S Ratio Results
Sales per Share
$15.00
Valuation Assessment
Moderate P/S ratio indicates reasonable valuation
Market Metrics
Calculations
Sales per Share: $15.00M ÷ 1.00M = $15.00
P/S Ratio: $30 ÷ $15.00 = 2.00x
Example: Company X
Company Data
Stock Price: $30.00
Total Sales: $15,000,000
Shares Outstanding: 1,000,000
Period: Annual (TTM)
Calculations
Sales per Share = $15,000,000 ÷ 1,000,000 = $15.00
P/S Ratio = $30.00 ÷ $15.00 = 2.0x
This indicates fair valuation for most industries
P/S Ratio Guide
P/S < 1.0x: Undervalued
Low ratio suggests potential value
P/S 1.0-3.0x: Fair Value
Reasonable valuation range
P/S 3.0-6.0x: Premium
High growth expectations
P/S > 6.0x: Overvalued
May indicate overvaluation
Note: Always compare P/S ratios within the same industry. Tech companies typically have higher ratios than traditional industries.
Understanding Price-to-Sales Ratio
What is P/S Ratio?
The Price-to-Sales (P/S) ratio compares a company's stock price to its sales per share. It measures how much investors are willing to pay for each dollar of sales, helping evaluate if a stock is undervalued or overvalued.
Why Use P/S Ratio?
- •Sales figures are harder to manipulate than earnings
- •Applicable to all companies, including unprofitable ones
- •Sales are less volatile than earnings
- •Useful for identifying undervalued opportunities
P/S Ratio Formulas
Sales per Share = Total Sales ÷ Shares Outstanding
P/S Ratio = Stock Price ÷ Sales per Share
Industry Considerations
- •Technology: Typically higher P/S ratios (3-10x)
- •Retail: Moderate P/S ratios (0.5-2x)
- •Manufacturing: Lower P/S ratios (0.5-1.5x)
Advantages of P/S Ratio
- ✓Sales are harder to manipulate than earnings
- ✓Works for unprofitable companies
- ✓Less volatile than earnings-based ratios
- ✓Useful for early-stage growth companies
Limitations
- ⚠Ignores cost structure and profitability
- ⚠Doesn't capture operating efficiency
- ⚠Industry comparison is essential
- ⚠Should be used with other metrics