Use multiple valuation metrics--not just the ratio of price-to-earnings but the ratios of price-to-sales and price-to-book.
Currently, NVTL has a price-to-sales ratio of 1.9, below the industry average of 2.8.
On a price-to-sales basis, SanDisk is less attractive, yet its valuation is still not particularly distressing.
Netsuite already trades at a premium (as measured by price-to-sales) to rivals Salesforce.com and SAP.
FORBES: Netsuite: A Sign That SaaS Firms Are Immune From A Slump?
At 11, its trailing-twelve-months PE ratio is low, as is its price-to-sales ratio.
However, the stock looks very cheap when looking at the price-to-sales per share multiple.
FORBES: Jumping Into The Cage With THQ For At Least A 12% Gain
Debt-laden companies on the verge of bankruptcy, however, can emerge with low price-to-sales ratios.
The stock trades near the low end of both its historical price-to-cash earnings and price-to-sales ranges.
In this case, price-to-sales represents one of the last remaining measures for valuing the business.
Freeport McMoRan trades at a discount to its 3-year average price-to-sales ratio of 2.218.
Exceptions: Computer Sciences, Garmin and L-3 Communications Holdings, which carry price-to-sales multiples below five-year averages.
Its price-to-sales multiple, 2.5 times, looks decent relative to 3.5 for imaging concern Getty Images.
Its present price-to-sales multiple of 2.7 stands well above a five-year average of 0.9.
The stocks in our table are also expensive when measured by their price-to-sales ratio (PSR).
Based on its price-to-sales multiple, Greenhill is approximately 16% undervalued using its trailing 12 months of sales.
Again, its price-to-sales ratio of 4.26 is at a premium to the peer group average of 0.70.
On a price-to-sales basis, the stock is trading in line with the peer group average of 2.57x.
FORBES: Hershey's Beats Estimates On Back Of New Product Launches And Sales
Furthermore, the current price-to-sales multiple of 2.05x is above the historically normal range of 1.47x to 2.0x.
The stock has traded below its historically normal levels of price-to-cash earnings and price-to-sales during this time.
On a price-to-sales and price-to-book basis as well, the stock is trading at premiums to industry averages.
We also required companies to have latest 12-month price-to-sales ratios at a discount to their five-year averages.
The stock does trade on the low side of its historically normal ranges of price-to-sales and price-to-cash earnings.
Say the company has a price-to-sales ratio of 0.7 while its peers have higher ratios of, say, 2.
On a price-to-sales basis, Unilever trades at 1.89, a 57.5% premium to the peer group average of 1.2.
Similarly, the current price-to-sales of 1.95x is fairly high compared to the historically normal range of .95x to 2.00x.
The current price-to-sales of 1.65x is on the low end of the historically normal range of 1.56x to 2.04x.
The current price-to-cash earnings and price-to-sales valuation metrics are sitting comfortably within the historically normal valuation for this stock.
FORBES: Tiffany Is Seductive But Resist The Siren, Take Breakfast Elsewhere
The stock currently trades above its historically normal price-to-cash earnings and price-to-sales levels.
FORBES: Toyota Should Pay Its $16.4 Million Fine And Move On
We see a similar overvaluation when looking at historically normal levels of price-to-sales.
Ardour Capital's Nasdeo says other traditional metrics, such as price-to-sales or price-to-book value, are not really much help either.
应用推荐