The Price to Sales Ratio, or PS Ratio, is a popular valuation ratio. It is the share price of a company divided by its sales per share. This is measured on a historical basis and earnings are diluted and normalised.
Some argue that, since sales figures are less easy to manipulate than either earnings or book value, the price-to-sales ratio is a more reliable indicator of company value.
When EPS are negative or depressed temporarily the Price to Sales ratio can be a more useful indicator than the PE Ratio, and a low P/S can indicate a higher profit potential if the stock recovers.
Some commentators have called it 'The King of the Value Factors' and look for P/S ratios of significantly less than 1.
It should be noted that the P/S ratio was abused during the dot com years to promote companies with no earnings or profits.
Earnings are measured on a normalised and diluted basis.
| Ticker | Name | P / S | StockRank™ |
|---|---|---|---|
| LON:GVCT | Guinness Vct | -16,066.91 | 10 |
| LON:GV2O | Gresham House Renewable Energy VCT 2 | -1,043.59 | 14 |
| LON:FWT | Foresight Technology VCT | -422.52 | 0 |
| LON:IIG | Intuitive Investments | -322.89 | 35 |
| LON:IEM | Impax Environmental Markets | -208.39 | 0 |