One of the ratios used to figure out PPS for growt
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Posted On: 10/13/2019 2:53:07 PM
One of the ratios used to figure out PPS for growth stock is Price-To- Sales Ratios...if we ONLY used Price-sales-ratio to determine PPS...
How the Price-To-Sales Ratio Works
The price-to-sales ratio (Price/Sales or P/S) is calculated by taking a company's market capitalization (the number of outstanding shares multiplied by the share price) and divide it by the company's total sales or revenue over the past 12 months. The lower the P/S ratio, the more attractive the investment. Price-to-sales provides a useful measure for sizing up stocks.
Per data, link below, Healthcare companies’ p/s, depending on which industry, can range from 0.52 to 4.49...so right now gnbt’s market cap is approximately 90 million, and let’s use docj’s estimate of $500 million since that’s more conservative...the p/s ratio will only be 0.18 (90 million divided by $500 million)...which is significantly lower than industry average...
If we used 0.52 as the projected P/S, then the market cap should be around $260 million (0.52 divided by 0.18 x 90 million), which means the PPS should be around $3.56 after the dividend ($260 million of market cap divided by 73 million shares outstanding - assuming there will be 73 million shares outstanding after dividend)...
If we used 4.49 as P/S ratio, then the market cap should be around $2.2 billion (4.49 divided by .18 x 90 million), and PPS should be around $30.75 after the dividend ($2.2 billion of market cap divided by 73 million shares outstanding - assuming there will be 73 million shares outstanding after dividend)...
I hear people normally use 10 as P/S ratio...if that's the case then PPS should be $68.49 after the dividend.
All these PPS are calculated after the dividend, so you will have 2 shares at these PPS.
Of course, I am ONLY using one ratio to come up with PPS...there are other ratios to be used such as EPS, but since I only have estimated revenue numbers...I thought I just do some calculations based on estimated revenue numbers...
http://pages.stern.nyu.edu/~adamodar/New_Home...sdata.html
How the Price-To-Sales Ratio Works
The price-to-sales ratio (Price/Sales or P/S) is calculated by taking a company's market capitalization (the number of outstanding shares multiplied by the share price) and divide it by the company's total sales or revenue over the past 12 months. The lower the P/S ratio, the more attractive the investment. Price-to-sales provides a useful measure for sizing up stocks.
Per data, link below, Healthcare companies’ p/s, depending on which industry, can range from 0.52 to 4.49...so right now gnbt’s market cap is approximately 90 million, and let’s use docj’s estimate of $500 million since that’s more conservative...the p/s ratio will only be 0.18 (90 million divided by $500 million)...which is significantly lower than industry average...
If we used 0.52 as the projected P/S, then the market cap should be around $260 million (0.52 divided by 0.18 x 90 million), which means the PPS should be around $3.56 after the dividend ($260 million of market cap divided by 73 million shares outstanding - assuming there will be 73 million shares outstanding after dividend)...
If we used 4.49 as P/S ratio, then the market cap should be around $2.2 billion (4.49 divided by .18 x 90 million), and PPS should be around $30.75 after the dividend ($2.2 billion of market cap divided by 73 million shares outstanding - assuming there will be 73 million shares outstanding after dividend)...
I hear people normally use 10 as P/S ratio...if that's the case then PPS should be $68.49 after the dividend.
All these PPS are calculated after the dividend, so you will have 2 shares at these PPS.
Of course, I am ONLY using one ratio to come up with PPS...there are other ratios to be used such as EPS, but since I only have estimated revenue numbers...I thought I just do some calculations based on estimated revenue numbers...
http://pages.stern.nyu.edu/~adamodar/New_Home...sdata.html
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