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This valuation method assumes that the stock valuation will revert to its historical mean in terms of Price/Sales Ratio. The reason we use P/S Ratio instead of P/E Ratio or P/B Ratio is because Price/Sales Ratio is independent of profit margin, and can be applied to a broader range of situations.
Median P/S Value is calculated as trailing twelve months (TTM) revenue per share times 10-Year median P/S ratio. CF Industries Holdings Inc's revenue per share for the trailing twelve months (TTM) ended in Mar. 2016 was $18.544. CF Industries Holdings Inc's 10-Year median P/S ratio is 1.99. Therefore, the Median P/S Value for today is $36.81.
As of today, CF Industries Holdings Inc's share price is $27.70. CF Industries Holdings Inc's median P/S value is $36.81. Therefore, CF Industries Holdings Inc's Price to Median P/S Value Ratio for today is 0.75.
During the past 13 years, the highest Price to Median P/S Value Ratio of CF Industries Holdings Inc was 1.80. The lowest was 0.10. And the median was 0.93.
CF Industries Holdings Inc's Median P/S Value for today is calculated as
|Median P/S Value||=||Total Annual Sales / Shares Outstanding||*||10-Year Median P/S Ratio|
|=||Revenue per Share (TTM)||*||10-Year Median P/S Ratio|
10-Year Median P/S Ratio is 1.99.
CF Industries Holdings Inc's revenue per share for the trailing twelve months (TTM) ended in Mar. 2016 was 5.555 (Jun. 2015 ) + 3.963 (Sep. 2015 ) + 4.726 (Dec. 2015 ) + 4.3 (Mar. 2016 ) = $18.544.
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.
CF Industries Holdings Inc's Price to Median P/S Value Ratio for today is calculated as
|Price to Median P/S Value||=||Share Price||/||Median P/S Value|
CF Industries Holdings Inc Annual Data
CF Industries Holdings Inc Quarterly Data