Definition
Median P/S Value is calculated as follows:
Median P/S Value = Total Annual Sales / Shares Outstanding * 10YearMedianPS Ratio.
Explanation
This valuation method assumes that the stock valuation will revert to its historical mean in terms of Price/Sales Ratio. The reason we use
Price/Sales Ratio instead of
Price/Earnings Ratio or
Price/Book Ratio is because Price/Sales Ratio is independent of profit margin, and can be applied to a broader range of situations.
It also assumes that over time the profit margin is constant. If a company increases its profit margin to a sustainable level, this value might under-estimate its value. If it has permanent declined profit margins, this may over-estimate the companys value.
Related Terms
Price/Sales Ratio,
Price/Earnings Ratio,
Price/Book Ratio,
Intrinsic Value (DCF Projected),
Intrinsic Value (DCF),
Intrinsic Value (DE),
Graham Number,
GAVA* All numbers are in millions except for per share dataBB&T Corp Annual Data
| Dec03 | Dec04 | Dec05 | Dec06 | Dec07 | Dec08 | Dec09 | Dec10 | Dec11 | Dec12 |
|---|
| medpsvalue |  |  |  |  |  |  |  |  |  |  |
|---|
BB&T Corp Quarterly Data
| Dec10 | Mar11 | Jun11 | Sep11 | Dec11 | Mar12 | Jun12 | Sep12 | Dec12 | Mar13 |
|---|
| medpsvalue |  |  |  |  |  |  |  |  |  |  |
|---|