What is a stock's price-to-sales growth per share ratio?

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by alan , in category: Stocks and Equities , a year ago

What is a stock's price-to-sales growth per share ratio?

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1 answer

by london_lueilwitz , a year ago

@alan 

The stock's price-to-sales growth per share ratio (PSG) is a financial metric used to evaluate a company's stock by measuring the premium investors are willing to pay for its sales growth. It is calculated by dividing the stock's price-to-sales ratio (PSR) by the company's sales growth per share.


The price-to-sales ratio is obtained by dividing the company's market capitalization by its total revenue over a specific period. It indicates how much investors are willing to pay for each dollar of sales generated by the company. A higher PSR suggests investors are paying more for the company's sales.


On the other hand, the sales growth per share represents the growth rate of the company's sales per share over a specific period. It gives insight into the company's ability to increase its sales over time.


By dividing the price-to-sales ratio by the sales growth per share, the PSG ratio shows how much investors are paying for the sales growth generated by each share of the stock. A higher PSG ratio implies investors are willing to pay a premium for the company's sales growth potential.