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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. Novo Nordisk A/S's revenue per share for the trailing twelve months (TTM) ended in Mar. 2016 was $6.341. Novo Nordisk A/S's 10-Year median P/S ratio is 5.45. Therefore, the Median P/S Value for today is $34.94.
As of today, Novo Nordisk A/S's share price is $55.33. Novo Nordisk A/S's median P/S value is $34.94. Therefore, Novo Nordisk A/S's Price to Median P/S Value Ratio for today is 1.61.
During the past 13 years, the highest Price to Median P/S Value Ratio of Novo Nordisk A/S was 1.93. The lowest was 0.14. And the median was 0.89.
Novo Nordisk A/S'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 5.45.
Novo Nordisk A/S's revenue per share for the trailing twelve months (TTM) ended in Mar. 2016 was 1.576 (Jun. 2015 ) + 1.568 (Sep. 2015 ) + 1.635 (Dec. 2015 ) + 1.562 (Mar. 2016 ) = $6.341.
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.
Novo Nordisk A/S'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|
Novo Nordisk A/S Annual Data
Novo Nordisk A/S Quarterly Data