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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. Nielsen NV's revenue per share for the trailing twelve months (TTM) ended in Mar. 2014 was $15.32. Nielsen NV's 10-Year median P/S ratio is 2.02. Therefore, the Median P/S Value for today is $30.95.
As of today, Nielsen NV's share price is $48.33. Nielsen NV's median P/S value is $30.95. Therefore, Nielsen NV's Price to Median P/S Value Ratio for today is 1.60.
During the past 6 years, the highest Price to Median P/S Value Ratio of Nielsen NV was 1.52. The lowest was 0.75. And the median was 1.01.
Nielsen NV'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 2.02.
Nielsen NV's revenue per share for the trailing twelve months (TTM) ended in Mar. 2014 was 3.63 (Jun. 2013 ) + 3.63 (Sep. 2013 ) + 4.19 (Dec. 2013 ) + 3.87 (Mar. 2014 ) = $15.32.
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.
Nielsen NV'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|
Nielsen NV Annual Data
Nielsen NV Quarterly Data