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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. Nokia Oyj's revenue per share for the trailing twelve months (TTM) ended in Sep. 2015 was $3.785. Nokia Oyj's 10-Year median P/S ratio is 1.26. Therefore, the Median P/S Value for today is $4.69.
As of today, Nokia Oyj's share price is $5.87. Nokia Oyj's median P/S value is $4.69. Therefore, Nokia Oyj's Price to Median P/S Value Ratio for today is 1.25.
During the past 13 years, the highest Price to Median P/S Value Ratio of Nokia Oyj was 6.93. The lowest was 0.23. And the median was 1.11.
Nokia Oyj'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 1.26.
Nokia Oyj's revenue per share for the trailing twelve months (TTM) ended in Sep. 2015 was 1.135 (Dec. 2014 ) + 0.874 (Mar. 2015 ) + 0.913 (Jun. 2015 ) + 0.863 (Sep. 2015 ) = $3.785.
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.
Nokia Oyj'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|
Nokia Oyj Annual Data
Nokia Oyj Quarterly Data