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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. Lamar Advertising Co's revenue per share for the trailing twelve months (TTM) ended in Jun. 2014 was $13.17. Lamar Advertising Co's 10-Year median P/S ratio is 3.62. Therefore, the Median P/S Value for today is $47.61.
As of today, Lamar Advertising Co's share price is $51.14. Lamar Advertising Co's median P/S value is $47.61. Therefore, Lamar Advertising Co's Price to Median P/S Value Ratio for today is 1.07.
During the past 13 years, the highest Price to Median P/S Value Ratio of Lamar Advertising Co was 2.66. The lowest was 0.21. And the median was 1.31.
Lamar Advertising Co'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 3.62.
Lamar Advertising Co's revenue per share for the trailing twelve months (TTM) ended in Jun. 2014 was 3.4 (Sep. 2013 ) + 3.31 (Dec. 2013 ) + 3 (Mar. 2014 ) + 3.46 (Jun. 2014 ) = $13.17.
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.
Lamar Advertising Co'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|
Lamar Advertising Co Annual Data
Lamar Advertising Co Quarterly Data