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As of today, Red Hat Inc's share price is $56.38. Red Hat Inc's Revenue per Share for the trailing twelve months (TTM) ended in May. 2014 was $8.33. Hence, Red Hat Inc's P/S Ratio for today is 6.78.
During the past 13 years, Red Hat Inc's highest P/S Ratio was 40.61. The lowest was 2.94. And the median was 9.07.
Red Hat Inc has shown predictable revenue and earnings growth.
During the past 12 months, the average Revenue per Share Growth Rate of Red Hat Inc was 17.80% per year. During the past 3 years, the average Revenue per Share Growth Rate was 19.90% per year. During the past 5 years, the average Revenue per Share Growth Rate was 20.10% per year. During the past 10 years, the average Revenue per Share Growth Rate was 26.60% per year.
During the past 13 years, Red Hat Inc's highest 3-Year average Revenue per Share Growth Rate was 45.00% per year. The lowest was -28.40% per year. And the median was 23.85% per year.
The P/S Ratio is another ratio widely used to value stocks. It was first used by Ken Fisher.
Red Hat Inc's P/S Ratio for today is calculated as
|P/S Ratio||=||Share Price||/||Revenue per Share (TTM)|
Red Hat Inc's Share Price of today is $56.38.
Red Hat Inc's Revenue per Share for the trailing twelve months (TTM) ended in May. 2014 was 1.96 (Aug. 2013 ) + 2.07 (Nov. 2013 ) + 2.09 (Feb. 2014 ) + 2.21 (May. 2014 ) = $8.33.
It can also be calculated from the numbers for the whole company:
The revenue here is for the trailing 12 months.
The P/S ratio is an excellent valuation indicator if you want to compare a stock with its historical valuation or with the stocks in the same industry. The P/S ratio works especially well when you want to compare the stocks current valuation with its historical valuation. The P/S ratio is a great valuation tool for evaluating cyclical businesses where the P/E ratio works poorly. It works the best when comparing the current valuation with the historical valuation because over time, a companys profit margin tends to revert to the mean.
When the P/S ratio is applied to the whole stock market, it can be used to evaluate the current market valuation and projected returns. In this case, the price is the total market cap of all stocks that are traded, and sales are the GDP of the country. This is how Warren Buffett estimates the broad market valuation and project future returns.
Similar to the Price/Earnings ratio and Price/Cash Flow or Price/Free Cash Flow, the P/E ratio measures the valuation based on the earning power of the company. This is where it is different from Price/Book ratio, which measures the valuation based on the companys balance sheet.
The P/S ratio does not tell you how cheap or expensive the stock is. It cannot be used to compare companies in different industries. It works better for companies within the same industry because these companies tend to have similar capital structures and profit margins. It works the best when comparing a company with itself in the past.
Red Hat Inc Annual Data
Red Hat Inc Quarterly Data