Price-to-Sales (P/S) Ratio

A stock's market price divided by revenue per share. Useful for unprofitable companies where P/E is meaningless.

Price-to-Sales (P/S) Ratio — A stock's market price divided by revenue per share. Useful for unprofitable companies where P/E is meaningless.

Key facts

Category
Valuation
Definition
A stock's market price divided by revenue per share. Useful for unprofitable companies where P/E is meaningless.
Formula
P/S = Market cap / Revenue (trailing 12 months)
Live example
/research/stock/PLTR
Last updated
2026-06-17

Formula

P/S = Market cap / Revenue (trailing 12 months)

Worked example

If a software company has $1B market cap and $200M annual revenue, P/S = 5.0 — investors pay $5 in market price for every $1 of annual revenue.

Interpretive bands

P/S < 1.0
Trading at a discount to revenue. Common in distressed names or low-margin businesses.
P/S 1.0 – 4.0
Typical for mature businesses.
P/S > 10
Aggressive growth expectations. Common for high-growth SaaS companies.

How IndexAlpha uses Price-to-Sales (P/S) Ratio

Especially useful for evaluating high-growth, pre-profit companies. Surfaced on the Valuation card with peer-relative shading.

See it live

The Price-to-Sales (P/S) Ratio metric shows up on every IndexAlpha research page. See it now on PLTR — or research any stock to view its Price-to-Sales (P/S) Ratio.

Related terms

Common questions

What is Price-to-Sales (P/S) Ratio?

A stock's market price divided by revenue per share. Useful for unprofitable companies where P/E is meaningless.

How is Price-to-Sales (P/S) Ratio calculated?

P/S = Market cap / Revenue (trailing 12 months). If a software company has $1B market cap and $200M annual revenue, P/S = 5.0 — investors pay $5 in market price for every $1 of annual revenue.

How does IndexAlpha use Price-to-Sales (P/S) Ratio?

Especially useful for evaluating high-growth, pre-profit companies. Surfaced on the Valuation card with peer-relative shading.

Sources