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 TTM 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.
This is measured on a TTM basis and earnings are diluted and normalised.
Ticker | Name | P / S | StockRank™ |
---|---|---|---|
ASX:XTC | Xantippe Resources | 2,058,406.95 | 5 |
ASX:IRD | Iron Road | 1,703,275.28 | 33 |
ASX:MAU | Magnetic Resources NL | 1,326,071.53 | 5 |
ASX:LM1 | Leeuwin Metals | 1,108,770.95 | 11 |
ASX:VRC | Volt Resources | 872,870.38 | 13 |