Investor's Calculator日本語

PSR (Price to Sales Ratio) Explained

PSR (Price to Sales Ratio) shows how many times a company's revenue per share the current share price represents.

PSR (times) = Share Price ÷ Revenue Per Share

What it measures

PSR shows how many times a company's annual revenue, expressed per share, an investor is paying for through the share price. Because it is based on revenue rather than profit, it can be applied to growth-stage companies that are not yet profitable.

How to read it

  • For companies with high revenue but low profit margins (or ongoing losses), whether they can become profitable in the future is often the key question.
  • Appropriate PSR levels vary widely by industry. Software companies and other high-margin business models are sometimes said to command higher PSRs, but this is only a general tendency and does not guarantee anything about any individual company.

This article is provided for general informational purposes only and does not recommend or solicit the purchase or sale of any specific investment method or security. Final investment decisions are your own responsibility.

Frequently Asked Questions

Can PSR be used for loss-making companies?
Yes. Unlike PER, which cannot be calculated when EPS is negative, PSR is based on revenue, so it can still be calculated for companies that are not yet profitable. This is one reason PSR is often used to evaluate growth-stage companies.
Does a low PSR mean a stock is undervalued?
As with PER and PBR, a low PSR alone does not indicate a stock is undervalued. Business models with low profit margins tend to show low PSR even with high revenue, so it is important to also check profitability.

Related terms