Switch to:
Red Hat Inc (NYSE:RHT)
Median P/S Value
$80.32 (As of Today)

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. Red Hat Inc's revenue per share for the trailing twelve months (TTM) ended in Feb. 2015 was $9.46. Red Hat Inc's 10-Year median P/S ratio is 8.49. Therefore, the Median P/S Value for today is $80.32.

As of today, Red Hat Inc's share price is $78.81. Red Hat Inc's median P/S value is $80.32. Therefore, Red Hat Inc's Price to Median P/S Value Ratio for today is 0.98.

RHT' s 10-Year Price to Median P/S Value Range
Min: 0.52   Max: 12.75
Current: 0.98

0.52
12.75

During the past 13 years, the highest Price to Median P/S Value Ratio of Red Hat Inc was 12.75. The lowest was 0.52. And the median was 1.19.

RHT's Price to Median P/S Value is ranked higher than
84% of the 2995 Companies
in the Global Software - Application industry.

( Industry Median: 1.40 vs. RHT: 0.98 )

Definition

Red Hat 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
=9.46*8.49
=80.32

10-Year Median P/S Ratio is 8.49.
Red Hat Inc's revenue per share for the trailing twelve months (TTM) ended in Feb. 2015 was 2.21 (May. 2014 ) + 2.34 (Aug. 2014 ) + 2.43 (Nov. 2014 ) + 2.48 (Feb. 2015 ) = $9.46.

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Explanation

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.

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 company’s value.

Red Hat 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
=78.81/80.32
=0.98

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Related Terms

P/E Ratio, P/B Ratio, P/S Ratio, Intrinsic Value (DCF Projected), Intrinsic Value (DCF), Intrinsic Value (DE), Graham Number, GAVA


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Red Hat Inc Annual Data

Feb06Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15
medpsvalue 11.4615.5420.1226.3232.7739.4848.9957.7367.9280.32

Red Hat Inc Quarterly Data

Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14Feb15
medpsvalue 55.5157.8060.1062.7365.3768.0070.8174.0477.1080.41
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GuruFocus Premium Plus Membership

FEEDBACK