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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. McCormick & Co Inc's revenue per share for the trailing twelve months (TTM) ended in Feb. 2016 was $33.476. McCormick & Co Inc's 10-Year median P/S ratio is 1.84. Therefore, the Median P/S Value for today is $61.60.
As of today, McCormick & Co Inc's share price is $97.52. McCormick & Co Inc's median P/S value is $61.60. Therefore, McCormick & Co Inc's Price to Median P/S Value Ratio for today is 1.58.
During the past 13 years, the highest Price to Median P/S Value Ratio of McCormick & Co Inc was 1.51. The lowest was 0.50. And the median was 0.95.
McCormick & Co 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 1.84.
McCormick & Co Inc's revenue per share for the trailing twelve months (TTM) ended in Feb. 2016 was 7.939 (May. 2015 ) + 8.204 (Aug. 2015 ) + 9.303 (Nov. 2015 ) + 8.03 (Feb. 2016 ) = $33.476.
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.
McCormick & Co 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|
McCormick & Co Inc Annual Data
McCormick & Co Inc Quarterly Data