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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. TJX Companies Inc's revenue per share for the trailing twelve months (TTM) ended in Apr. 2015 was $42.18. TJX Companies Inc's 10-Year median P/S ratio is 0.85. Therefore, the Median P/S Value for today is $35.85.
As of today, TJX Companies Inc's share price is $66.80. TJX Companies Inc's median P/S value is $35.85. Therefore, TJX Companies Inc's Price to Median P/S Value Ratio for today is 1.86.
During the past 13 years, the highest Price to Median P/S Value Ratio of TJX Companies Inc was 1.91. The lowest was 0.27. And the median was 1.02.
TJX Companies 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 0.85.
TJX Companies Inc's revenue per share for the trailing twelve months (TTM) ended in Apr. 2015 was 9.81 (Jul. 2014 ) + 10.51 (Oct. 2014 ) + 11.93 (Jan. 2015 ) + 9.93 (Apr. 2015 ) = $42.18.
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.
TJX Companies 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|
TJX Companies Inc Annual Data
TJX Companies Inc Quarterly Data