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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. Two Harbors Investment Corp's revenue per share for the trailing twelve months (TTM) ended in Dec. 2016 was $1.82. Two Harbors Investment Corp's 10-Year median P/S ratio is 5.63. Therefore, the Median P/S Value for today is $10.25.
As of today, Two Harbors Investment Corp's share price is $10.11. Two Harbors Investment Corp's median P/S value is $10.25. Therefore, Two Harbors Investment Corp's Price to Median P/S Value Ratio for today is 0.99.
During the past 10 years, the highest Price to Median P/S Value Ratio of Two Harbors Investment Corp was 13.61. The lowest was 0.68. And the median was 0.95.
Two Harbors Investment Corp'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 5.63.
Two Harbors Investment Corp's revenue per share for the trailing twelve months (TTM) ended in Dec. 2016 was 0.374 (Mar. 2016 ) + 0.445 (Jun. 2016 ) + 0.486 (Sep. 2016 ) + 0.515 (Dec. 2016 ) = $1.82.
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.
Two Harbors Investment Corp'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|
Two Harbors Investment Corp Annual Data
Two Harbors Investment Corp Quarterly Data
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