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Red Hat Inc  (NYSE:RHT) PS Ratio: 9.16 (As of Today)

As of today, Red Hat Inc's share price is $126.59. Red Hat Inc's Revenue per Share for the trailing twelve months (TTM) ended in May. 2017 was $13.83. Hence, Red Hat Inc's P/S Ratio for today is 9.16.

Warning Sign:

Red Hat Inc stock PS Ratio (=8.73) is close to 5-year high of 8.86

NYSE:RHT' s PS Ratio Range Over the Past 10 Years
Min: 2.94   Max: 13.22
Current: 8.73

2.94
13.22

During the past 13 years, Red Hat Inc's highest P/S Ratio was 13.22. The lowest was 2.94. And the median was 7.51.

NYSE:RHT's PS Ratio is ranked lower than
82% of the 1840 Companies
in the Global industry.

( Industry Median: 2.37 vs. NYSE:RHT: 8.73 )

Red Hat Inc's Revenue per Sharefor the three months ended in May. 2017 was $3.72. Its Revenue per Share for the trailing twelve months (TTM) ended in May. 2017 was $13.83.

Good Sign:

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 19.90% per year. During the past 3 years, the average Revenue per Share Growth Rate was 18.20% per year. During the past 5 years, the average Revenue per Share Growth Rate was 17.90% per year. During the past 10 years, the average Revenue per Share Growth Rate was 21.30% per year.

During the past 13 years, Red Hat Inc's highest 3-Year average Revenue per Share Growth Rate was 44.70% per year. The lowest was -28.60% per year. And the median was 20.60% per year.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Red Hat Inc Annual Data

Feb08 Feb09 Feb10 Feb11 Feb12 Feb13 Feb14 Feb15 Feb16 Feb17
PS Ratio Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 7.48 7.38 7.30 5.92 6.28

Red Hat Inc Quarterly Data

Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17 Aug17
PS Ratio Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 6.03 6.25 6.28 6.48 7.41

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Calculation

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)
=126.59/13.827
=9.16

Red Hat Inc's Share Price of today is $126.59.
Red Hat Inc's Revenue per Share for the trailing twelve months (TTM) ended in May. 2017 was 3.271 (Aug. 2016 ) + 3.368 (Nov. 2016 ) + 3.465 (Feb. 2017 ) + 3.723 (May. 2017 ) = $13.83.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

It can also be calculated from the numbers for the whole company:


The revenue here is for the trailing 12 months.


Explanation

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 stock's 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 company's 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 company's balance sheet.


Be Aware

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.


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