Price to Sales Ratio
Price to Sales Ratio shows how much investors pay for each dollar of a company’s annual sales, whether or not it is profitable.
How it is calculated
(Stock Price × Shares (Basic, Weighted) (latest quarter)) ÷ Revenue (TTM)
Shown as 0 when the result is negative.
Worked out for every trading day, from the latest reported figures on or before that day.
Quarterly and annual values are the daily value on the first trading day on or after each period end.
- Unit
- Ratio
- Periods
- Daily, Quarterly, Annual
- Source
- Calculated by stockrow from the inputs below
- Made from
- Stock Price, Shares (Basic, Weighted), Revenue
Reading Price to Sales Ratio
How to read it
The price to sales ratio divides the company’s market value — the stock price times the weighted basic share count of the latest quarter — by revenue for the trailing twelve months. The numerator moves every trading day with the share price and changes when the share count does; the denominator moves when a new quarter’s revenue replaces an old one. A higher value means investors pay more for each dollar of sales.
What is typical
What counts as high or low depends on how much of each sale a business keeps as profit. Companies with high margins and fast growth, such as software firms, usually trade at a much higher multiple of sales than low-margin businesses such as grocers, distributors or airlines. Compare a company with the median for the company’s sector rather than across the market.
Pitfalls
The ratio ignores costs and debt, so a company with thin or negative margins can look cheap on sales while earning nothing. stockrow shows the ratio as zero when the result is negative. It is worked out for every trading day, from the latest reported figures on or before that day, so a jump can come from a new report rather than the price. Quarterly and annual values are the daily value on the first trading day on or after each period end.