Price to Sales Ratio

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.

Stockopedia explains P / S

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.

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The 5 highest P / S Stocks in the Market

TickerNameP / SStockRank™
ASX:LINLindian Resources23,466,283.6015
ASX:TOUTLOU Energy2,229,187.3040
ASX:CVVCaravel Minerals1,531,790.0017
ASX:LPILithium Power International703,990.1353