What is a stock's price-to-revenue ratio?


by alan , in category: Stocks and Equities , 10 months ago

What is a stock's price-to-revenue ratio?

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1 answer

by jaylin.bartell , 10 months ago


The price-to-revenue ratio (P/R) or price-to-sales ratio (P/S) is a financial metric used to evaluate the valuation of a company's stock relative to its revenue. It is calculated by dividing the market price per share of the stock by the company's revenue per share.

The P/R ratio helps investors assess whether a stock is overvalued or undervalued by comparing the stock price to the company's sales. A low P/R ratio indicates that the stock may be undervalued, while a high P/R ratio suggests the stock may be overvalued.

However, it should be noted that the P/R ratio alone cannot provide a comprehensive analysis of a stock's value. Other factors like a company's profitability, growth prospects, industry comparables, and overall economic conditions should also be considered in making investment decisions.