The price-to-sales ratio (P/S) is an underappreciated valuation metric. Whereas most investors zero in on the price-to-earnings (P/E) ratio, I'm prone to focus on the price-to-sales ratio.

If the company had total sales of $1.2 million in the past 12 months, it would have a price-to-sales ratio of 1.67 (2 million divided by 1.2 million). How to Use Price-to-Sales Ratios ...

The price-to-sales ratio is especially handy with start-ups, small-cap companies, and unprofitable firms. Assume that Iditarod Express lost money in the past year but has a PSR of 0.50 when its ...

A stock's Price-to-Sales ratio reflects how much investors are paying for each dollar of revenues generated by the company. If the Price-to-Sales ratio is 1, it means that investors are paying $1 ...

A price to sales ratio of 2 means you're paying $2 for every $1 of sales the company makes. As you might have guessed, the lower the Price to Sales ratio, the better.

A price to Sales ratio of .5 means you're paying 50 cents for every $1 of sales the company makes. And paying less than a dollar for a dollar's worth of something is a good bargain.

The price-to-sales ratio is a convenient tool to gauge the value of stocks incurring losses or in an early development cycle. Stocks like JAKK, AGR, PCB, FIHL and GBX hold promise.

The price-to-sales ratio of the S&P 500 is making a multi-decade high, which could prompt concern about current market valuations.