A stock's current price divided by the company's sales per share over the trailing 12 months.
Origin
The company’s current price is received from ComStock, a division of Interactive Data Corporation. The company’s sales are found in the most recent annual and quarterly income statements.
Benefit
By looking at P/S Current alongside the 5 Yr Average P/S, you can quickly tell whether a company is currently valued above or below its historical average P/S. Because the denominator of P/S, sales, tends to be fairly steady, P/S is usually a less volatile price multiple than either P/E of P/B. Thus it can be an especially useful valuation measure for cyclicals or other companies with volatile earnings.
For the Pros
Use the following formula to look for companies that trade at a discount to their historical valuations. The same equation can be used with price/book, price/earnings, and price/cash flow:
PS Current / PS 5Yr Average