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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. General Dynamics Corp's revenue per share for the trailing twelve months (TTM) ended in Mar. 2015 was $92.87. General Dynamics Corp's 10-Year median P/S ratio is 1.08. Therefore, the Median P/S Value for today is $100.30.
As of today, General Dynamics Corp's share price is $142.41. General Dynamics Corp's median P/S value is $100.30. Therefore, General Dynamics Corp's Price to Median P/S Value Ratio for today is 1.42.
During the past 13 years, the highest Price to Median P/S Value Ratio of General Dynamics Corp was 1.60. The lowest was 0.50. And the median was 1.09.
General Dynamics Corp'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 1.08.
General Dynamics Corp's revenue per share for the trailing twelve months (TTM) ended in Mar. 2015 was 21.8 (Jun. 2014 ) + 22.92 (Sep. 2014 ) + 24.89 (Dec. 2014 ) + 23.26 (Mar. 2015 ) = $92.87.
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.
General Dynamics Corp'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|
General Dynamics Corp Annual Data
General Dynamics Corp Quarterly Data