What does ps value mean?

What does the ps value mean?

PS value is a method in stock valuation, called market efficiency valuation method = total market value/sales.

P is the stock price, S is the sales revenue per share, P/S or the total market value divided by sales, the value calculated in this way is called PS value (Price-to-Sales).

The advantage of PS, the price-to-sales ratio valuation method, is that sales revenue is the most stable and has low volatility;

and operating revenue is not affected by the company’s depreciation, inventory, and non-recurring revenue and expenses. , not as easy to control as profit;

Income will not have a negative value, there will be no meaningless situation, and it can be used even if the net profit is negative.

Therefore, the price-to-sales ratio valuation method can form a good complement to the price-to-earnings ratio valuation method.

The disadvantage of the price-to-sales ratio valuation method is that it cannot reflect the company's cost control ability. Even if costs rise and profits fall, sales revenue will not be affected, and the price-to-sales ratio will remain unchanged.

In addition, the price-to-sales ratio (PS) will decrease as the company's sales revenue scale expands; companies with larger operating revenue scale will have lower PS.

Use PS to look at the potential value of a company and see if its future profits can grow significantly. If the PS is low, there is a possibility of it rising.

The stocks with the lowest PS are long-term bull stocks. A book introduces a total of 20 stocks of three categories in the United States in the past 20 years. 20 years ago, the three categories of stocks had the lowest PS, the lowest PE, and the lowest PB. After 20 years, the stock with the lowest PE has the smallest increase, followed by the stock with the lowest PB, and the stock with the lowest PS has the largest increase.

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