In this video, I break down the P/S ratio (price to sales ratio), a powerful metric investors use to evaluate stocks when earnings aren’t available or reliable. You’ll learn exactly what the P/S ratio means, how to calculate it using market cap and revenue, and most importantly, how to interpret your results. I walk through real-world examples comparing Costco and Salesforce’s P/S ratios to show why industry context and profit margins matter when analyzing stocks. I also cover the key limitations of P/S ratios that every investor needs to know, including why low P/S doesn’t always mean a bargain. Whether you’re evaluating growth stocks, unprofitable companies, or just looking to add another tool to your stock analysis toolkit, this video gives you everything you need to understand the price to sales ratio.
Chapters:
0:00 – What is P/S Ratio?
0:23 – P/S Ratio Definition
0:41 – P/S Ratio Formula Explained
1:07 – High vs Low P/S: What It Means
1:37 – Costco vs Salesforce P/S Comparison
2:19 – P/S Ratio Limitations & Pitfalls
2:47 – Key Takeaways
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*Disclosure: This is not financial advice and should not be taken as such. The information contained in this video is an opinion. Some of the information could be wrong. This channel is owned and operated by Portfolio Constructs LLC. Some of the links above are affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through and make a purchase.
