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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. TAL Education Group's revenue per share for the trailing twelve months (TTM) ended in Feb. 2015 was $5.21. TAL Education Group's 10-Year median P/S ratio is 5.77. Therefore, the Median P/S Value for today is $30.06.
As of today, TAL Education Group's share price is $33.72. TAL Education Group's median P/S value is $30.06. Therefore, TAL Education Group's Price to Median P/S Value Ratio for today is 1.12.
During the past 7 years, the highest Price to Median P/S Value Ratio of TAL Education Group was 1.12. The lowest was 0.53. And the median was 1.02.
TAL Education Group'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 5.77.
TAL Education Group's revenue per share for the trailing twelve months (TTM) ended in Feb. 2015 was 1.1 (May. 2014 ) + 1.35 (Aug. 2014 ) + 1.21 (Nov. 2014 ) + 1.55 (Feb. 2015 ) = $5.21.
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.
TAL Education Group'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|
TAL Education Group Annual Data
TAL Education Group Quarterly Data