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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. Penn National Gaming Inc's revenue per share for the trailing twelve months (TTM) ended in Dec. 2015 was $33.677. Penn National Gaming Inc's 10-Year median P/S ratio is 0.38. Therefore, the Median P/S Value for today is $12.80.
As of today, Penn National Gaming Inc's share price is $16.13. Penn National Gaming Inc's median P/S value is $12.80. Therefore, Penn National Gaming Inc's Price to Median P/S Value Ratio for today is 1.26.
During the past 13 years, the highest Price to Median P/S Value Ratio of Penn National Gaming Inc was 1.76. The lowest was 0.33. And the median was 0.91.
Penn National Gaming 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 0.38.
Penn National Gaming Inc's revenue per share for the trailing twelve months (TTM) ended in Dec. 2015 was 8.122 (Mar. 2015 ) + 8.537 (Jun. 2015 ) + 8.944 (Sep. 2015 ) + 8.074 (Dec. 2015 ) = $33.677.
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.
Penn National Gaming 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|
Penn National Gaming Inc Annual Data
Penn National Gaming Inc Quarterly Data