Price-to-Sales Ratio Calculator: Is the Stock Cheap?

Is a 12.50 P/S cheap or expensive?

On the defaults — a $150.00 share price and $12.00 of sales per share — the price-to-sales ratio is 12.50. The price-to-sales ratio is the share price divided by sales per share, usually the trailing twelve months of sales — and it shows how many dollars of price each dollar of annual sales costs. As a rough yardstick, a P/S below 1 is cheap, 1–2 is fair, and above 2 is expensive — but the bar moves by sector: fast-growing software stocks often run above 5 because investors pay for future sales, while grocers and retailers often run below 1 because their margins are thin, so compare within one industry, not across them. A 12.50 P/S is far above the fair range — twelve dollars and fifty cents of price for each dollar of annual sales, which is the price of a fast grower, not a bargain.

Three things about the model are worth stating plainly.

First, the price-to-sales ratio is $150.00 ÷ $12.00 = 12.50. Second, the share price needed for a 10.00 P/S is 10.00 × $12.00 = $120.00. And third, the sales per share needed for a 10.00 P/S is $150.00 ÷ 10.00 = $15.00; all listed in Accuracy & limitations.

The worked example, line by line

Setup: $150.00 share price, $12.00 of sales per share, target P/S 10.00.

Line 1 — the ratio. The price-to-sales ratio is $150.00 ÷ $12.00 = 12.50.

Line 2 — the price needed. The share price needed for a 10.00 P/S is 10.00 × $12.00 = $120.00.

Line 3 — the sales needed. The sales per share needed for a 10.00 P/S is $150.00 ÷ 10.00 = $15.00.

Line 4 — the check. $12.00 of sales per share × 12.50 = $150.00, the share price; and each $1 of annual sales costs $12.50 of price.

Every branch, checked

Share price $120.00: Share price $120.00; sales per share $12.00; Price-to-sales ratio 10.00; share price needed for the 10.00 target $120.00; sales per share needed for the 10.00 target $12.00 — With a share price of $120.00 the P/S falls to 10.00 — ten dollars of price for each dollar of annual sales.

SPS $10.00: Share price $150.00; sales per share $10.00; Price-to-sales ratio 15.00; share price needed for the 10.00 target $100.00; sales per share needed for the 10.00 target $15.00 — With sales per share of $10.00 the P/S rises to 15.00 — fifteen dollars of price for each dollar of annual sales.

Share price $180.00: Share price $180.00; sales per share $12.00; Price-to-sales ratio 15.00; share price needed for the 10.00 target $120.00; sales per share needed for the 10.00 target $18.00 — With a share price of $180.00 the P/S rises to 15.00 — the same sales behind a higher price.

SPS $15.00: Share price $150.00; sales per share $15.00; Price-to-sales ratio 10.00; share price needed for the 10.00 target $150.00; sales per share needed for the 10.00 target $15.00 — With sales per share of $15.00 the P/S falls to 10.00 — the same price behind higher sales.

Share price $0: Share price $0.00; sales per share $12.00; Price-to-sales ratio 0.00; share price needed for the 10.00 target $120.00; sales per share needed for the 10.00 target $0.00 — With a share price of $0 the P/S is 0.00 — a free share costs nothing per dollar of sales.

SPS $6.00: Share price $150.00; sales per share $6.00; Price-to-sales ratio 25.00; share price needed for the 10.00 target $60.00; sales per share needed for the 10.00 target $15.00 — With sales per share of $6.00 the P/S rises to 25.00 — twenty-five dollars of price for each dollar of annual sales.

What-if bars — Share price halved, SPS doubled, share price doubled: Share price halved to $75.00: P/S 6.25; sales per share doubled to $24.00: P/S 6.25; share price doubled to $300.00: P/S 25.00 — Halving the share price halves the P/S to 6.25; doubling the sales halves it to 6.25; doubling the share price doubles it to 25.00.

The reverses, worked backwards

Smallest whole-cent share price for the P/S to reach 10.00: At the displayed $120.00 the figures are Share price $120.00; sales per share $12.00; Price-to-sales ratio 10.00; share price needed for the 10.00 target $120.00; sales per share needed for the 10.00 target $12.00. At the displayed $120.00 the P/S is 10.00 (exactly 10.00). At $119.99 the price is $0.01 short of the $120.00 needed — and the unrounded P/S is 9.999167, which displays as 10.00 after rounding, so $120.00 is the smallest whole-cent share price for the P/S to reach 10.00.

Smallest whole-cent share price for the P/S to reach 12.50: At the displayed $150.00 the figures are Share price $150.00; sales per share $12.00; Price-to-sales ratio 12.50; share price needed for the 12.50 target $150.00; sales per share needed for the 12.50 target $12.00. At the displayed $150.00 the P/S is 12.50 (exactly 12.50). At $149.99 the price is $0.01 short of the $150.00 needed — and the unrounded P/S is 12.499167, which displays as 12.50 after rounding, so $150.00 is the smallest whole-cent share price for the P/S to reach 12.50.

Largest whole-cent sales per share for the P/S to STAY at or above 12.50: At the displayed $12.00 the figures are Share price $150.00; sales per share $12.00; Price-to-sales ratio 12.50; share price needed for the 12.50 target $150.00; sales per share needed for the 12.50 target $12.00. At the displayed $12.00 the P/S is 12.50 (exactly 12.50). At $12.01 the P/S is 12.49 — and the unrounded P/S is 12.489592, plainly below the 12.50 line, no rounding trap — so $12.00 is the largest whole-cent sales per share for the P/S to stay at or above 12.50.

Smallest whole-cent share price for the P/S to reach 7.50: At the displayed $90.00 the figures are Share price $90.00; sales per share $12.00; Price-to-sales ratio 7.50; share price needed for the 7.50 target $90.00; sales per share needed for the 7.50 target $12.00. At the displayed $90.00 the P/S is 7.50 (exactly 7.50). At $89.99 the price is $0.01 short of the $90.00 needed — and the unrounded P/S is 7.499167, which displays as 7.50 after rounding, so $90.00 is the smallest whole-cent share price for the P/S to reach 7.50.

Largest whole-cent sales per share for the P/S to STAY at or above 10.00: At the displayed $15.00 the figures are Share price $150.00; sales per share $15.00; Price-to-sales ratio 10.00; share price needed for the 10.00 target $150.00; sales per share needed for the 10.00 target $15.00. At the displayed $15.00 the P/S is 10.00 (exactly 10.00). At $15.01 the P/S is 9.99 — and the unrounded P/S is 9.993338, plainly below the 10.00 line, no rounding trap — so $15.00 is the largest whole-cent sales per share for the P/S to stay at or above 10.00.

Smallest whole-cent share price for the P/S to reach 15.00: At the displayed $180.00 the figures are Share price $180.00; sales per share $12.00; Price-to-sales ratio 15.00; share price needed for the 15.00 target $180.00; sales per share needed for the 15.00 target $12.00. At the displayed $180.00 the P/S is 15.00 (exactly 15.00). At $179.99 the price is $0.01 short of the $180.00 needed — and the unrounded P/S is 14.999167, which displays as 15.00 after rounding, so $180.00 is the smallest whole-cent share price for the P/S to reach 15.00.

A warning about the neighbours: every price neighbour above shows as the target when rounded to two decimals, but its unrounded P/S is a hair below the target. A buyer underwriting on the unrounded P/S would still say no where the unrounded figure misses the line. The page prints the unrounded neighbour value in full so the rounding does not mislead you: 9.999167, 12.499167, 12.489592, 7.499167, 9.993338 and 14.999167.

What the defaults assume

The defaults are a $150.00 share price, $12.00 of sales per share and a target P/S of 10.00 — Share price $150.00; sales per share $12.00; Price-to-sales ratio 12.50; share price needed for the 10.00 target $120.00; sales per share needed for the 10.00 target $15.00. With Share price $120.00, Share price $120.00; sales per share $12.00; Price-to-sales ratio 10.00; share price needed for the 10.00 target $120.00; sales per share needed for the 10.00 target $12.00. With SPS $10.00, Share price $150.00; sales per share $10.00; Price-to-sales ratio 15.00; share price needed for the 10.00 target $100.00; sales per share needed for the 10.00 target $15.00. With Share price $180.00, Share price $180.00; sales per share $12.00; Price-to-sales ratio 15.00; share price needed for the 10.00 target $120.00; sales per share needed for the 10.00 target $18.00. With SPS $15.00, Share price $150.00; sales per share $15.00; Price-to-sales ratio 10.00; share price needed for the 10.00 target $150.00; sales per share needed for the 10.00 target $15.00. With Share price $0, Share price $0.00; sales per share $12.00; Price-to-sales ratio 0.00; share price needed for the 10.00 target $120.00; sales per share needed for the 10.00 target $0.00. With SPS $6.00, Share price $150.00; sales per share $6.00; Price-to-sales ratio 25.00; share price needed for the 10.00 target $60.00; sales per share needed for the 10.00 target $15.00. With What-if bars — Share price halved, SPS doubled, share price doubled, Share price halved to $75.00: P/S 6.25; sales per share doubled to $24.00: P/S 6.25; share price doubled to $300.00: P/S 25.00. With Share price $0, Price-to-sales ratio 0.00. With SPS $0, Price-to-sales ratio — (undefined: no sales to divide by). With Share price $119.99, Price-to-sales ratio 10.00. With SPS $12.01, Price-to-sales ratio 12.49. With Share price $120.00, Price-to-sales ratio 10.00. With SPS $15.01, Price-to-sales ratio 9.99. With SPS −$2.00, Price-to-sales ratio −75.00. With P/S bars, Share price $60.00: P/S 5.00; share price $300.00: P/S 25.00; sales per share $24.00: P/S 6.25; sales per share $6.00: P/S 25.00. With sales per share of −$2.00, the P/S is −75.00 — a negative P/S means the company booked negative sales, so the ratio is negative and meaningless as a valuation multiple.

A note on the rounding: with a share price of $119.99 the unrounded P/S is 9.999167, which rounds half-up to 10.00 — but it is still below the 10.00 line. With sales per share of $12.01 the unrounded P/S is 12.489592, which rounds to 12.49. With sales per share of $15.01 the unrounded P/S is 9.993338, which rounds half-up to 9.99 — but it is just below the 10.00 line. The page prints the unrounded values so the rounding does not mislead you.

Output · formula · meaning

Who uses this

• The investor checking a stock before buying: they learn a $150.00 share price on $12.00 of sales per share is a 12.50 P/S — and they check the $120.00 reverse to see the smallest price for a 10.00 P/S.
• The shareholder watching a loss-making company: they learn a company losing money has no P/E at all, but it still has sales, so the P/S still gives a price — and they check the $15.00 reverse to see the sales the company must reach for a 10.00 P/S.
• The value hunter scanning for cheap stocks: they learn a P/S below 1 is cheap by the rough yardstick — and they check the $90.00 reverse to see the smallest price for a 7.50 P/S.
• The student learning valuation ratios: they learn the P/S is price divided by sales, not income divided by price — and they check the $180.00 reverse to see the smallest price for a 15.00 P/S.

Accuracy & limitations

The math is first-principles: the price-to-sales ratio is the share price divided by sales per share; the share price needed at the target is the target P/S times sales per share; the sales per share needed at the target is the share price divided by the target P/S — all rounded to two decimals half-up. The reverses are judged on the UNROUNDED P/S: a neighbour one cent short shows as the target when rounded to two decimals, but its unrounded P/S is below the target, so it does not meet the bar — the page prints the unrounded neighbour value in full. Negative sales make the P/S negative: at −$2.00 of sales per share the P/S is −75.00 — a negative P/S means the company booked negative sales, so the ratio is negative and meaningless as a valuation multiple — the calculator shows the negative figure with a note, never hides it and never shows “—” for it. Zero sales is undefined: with no sales there is nothing to divide by, so the ratio cannot be computed — the calculator shows “—” with a note, never Infinity or NaN. What the model cannot do is judge the stock: use TRAILING-TWELVE-MONTH sales when the P/S is compared across years, because one quarter alone can mislead for seasonal businesses; a P/S below 1 is cheap, 1–2 is fair, and above 2 is expensive — but the bar moves by sector, so compare within one industry, not across them; fast-growing software stocks often run above 5 because investors pay for future sales, while grocers and retailers often run below 1 because their margins are thin; and the P/S does not account for profitability — a company can look cheap on P/S while losing money on every sale — so cross-check with the cash flow margin and the price-to-earnings ratio. Sales can be shaped by acquisitions, one-off items and channel stuffing, so a P/S built on one unusual year can mislead; use trailing-twelve-month sales and look at several years. Use it to see how many dollars of price each dollar of annual sales costs — then read the rest of the accounts.

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