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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. Carbo Ceramics Inc's revenue per share for the trailing twelve months (TTM) ended in Dec. 2014 was $28.24. Carbo Ceramics Inc's 10-Year median P/S ratio is 3.87. Therefore, the Median P/S Value for today is $109.29.
As of today, Carbo Ceramics Inc's share price is $30.00. Carbo Ceramics Inc's median P/S value is $109.29. Therefore, Carbo Ceramics Inc's Price to Median P/S Value Ratio for today is 0.28.
During the past 13 years, the highest Price to Median P/S Value Ratio of Carbo Ceramics Inc was 1.52. The lowest was 0.37. And the median was 1.17.
Carbo Ceramics 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 3.87.
Carbo Ceramics Inc's revenue per share for the trailing twelve months (TTM) ended in Dec. 2014 was 6.47 (Mar. 2014 ) + 7.69 (Jun. 2014 ) + 6.77 (Sep. 2014 ) + 7.31 (Dec. 2014 ) = $28.24.
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.
Carbo Ceramics 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|
Carbo Ceramics Inc Annual Data
Carbo Ceramics Inc Quarterly Data