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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. NextEra Energy Inc's revenue per share for the trailing twelve months (TTM) ended in Mar. 2014 was $36.08. NextEra Energy Inc's 10-Year median P/S ratio is 1.46. Therefore, the Median P/S Value for today is $52.68.
As of today, NextEra Energy Inc's share price is $93.89. NextEra Energy Inc's median P/S value is $52.68. Therefore, NextEra Energy Inc's Price to Median P/S Value Ratio for today is 1.80.
During the past 13 years, the highest Price to Median P/S Value Ratio of NextEra Energy Inc was 1.82. The lowest was 0.73. And the median was 0.94.
NextEra Energy 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 1.46.
NextEra Energy Inc's revenue per share for the trailing twelve months (TTM) ended in Mar. 2014 was 9.02 (Jun. 2013 ) + 10.3 (Sep. 2013 ) + 8.37 (Dec. 2013 ) + 8.39 (Mar. 2014 ) = $36.08.
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.
NextEra Energy 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|
NextEra Energy Inc Annual Data
NextEra Energy Inc Quarterly Data