Price-to-Sales (P/S) Ratio Calculator
Calculate the price-to-sales ratio for any stock using market cap and annual revenue.
Compare P/S across industries to spot overvalued or undervalued stocks.
Price-to-Sales (P/S) Ratio
The Price-to-Sales ratio compares a company’s market capitalization to its annual revenue. It is one of the few valuation metrics that works even when a company has no earnings — making it especially useful for growth companies and startups.
Two equivalent formulas:
P/S = Market Capitalization ÷ Annual Revenue
P/S = Stock Price ÷ Revenue Per Share
How to interpret P/S:
| P/S Range | General interpretation |
|---|---|
| < 1 | Very cheap, often a distressed or slow-growth business |
| 1 – 3 | Typical for mature, low-margin businesses |
| 3 – 10 | Common for profitable growth companies |
| 10 – 30 | High-growth SaaS, biotech, or tech companies |
| > 30 | Speculative pricing, market expects explosive growth |
Industry benchmarks matter most:
- Grocery retail: P/S typically 0.2 – 0.5
- Automotive: P/S typically 0.3 – 1.0
- Software/SaaS: P/S typically 5 – 20+
- Pharmaceuticals: P/S typically 2 – 8
Always compare P/S within the same industry. A P/S of 4 is cheap for software but expensive for a grocery chain.
When P/S is more useful than P/E:
- Company has negative earnings (startup, turnaround)
- Earnings are distorted by one-time charges or write-offs
- You want to value a pre-profit growth company
Limitations:
- Revenue does not equal profit. A company with P/S = 1 but 2% margins is very different from one with 40% margins.
- Always combine with gross margin and operating leverage analysis.
- High revenue growth can justify a high P/S: but only if margin expansion is also expected.
Example:
- Market cap: $5 billion, Annual revenue: $500 million
- P/S = 5,000M ÷ 500M = 10
- Reasonable for a high-growth SaaS company; expensive for a retailer
How we build and check this calculator
This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
SuperGlobalCalculator is independently built and maintained. See how we build and verify our calculators.