Formula
P/S Ratio
=
Market Capitalization
Total Revenue (TTM)
- Market Capitalization = Share Price × Shares Outstanding; the total market value of the company.
- Total Revenue (TTM) = Total sales generated in the trailing twelve months.
Alpha Finance
Current Value TTM
Market Cap
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Total Revenue (TTM)
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P/S Ratio
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P/S Drivers —
Table
| Year | P/S |
|---|
Definition
The Price-to-Sales (P/S) ratio compares a company's market price to its total revenue, showing how expensive the stock is relative to the sales it generates. It's especially useful for companies with no earnings yet. A low P/S may signal undervaluation or thin margins, while a high P/S reflects strong growth expectations or premium brand value. The ideal range varies significantly by sector — software and biotech can trade at 5–10×, while retail and manufacturing typically trade at 0.5–2×.
ValueP/S < 1.5×
Fair1.5 – 2.5×
Premium2.5 – 4.0×
Expensive> 4.0×
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