How To Value A Stock Using P/E Ratio and P/S Ratio Explained (With Formulas)

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In this video we will take a look at how to value a stock using the P/E and P/S ratios. The P/E ratio stands for price to earnings ratio, and the P/S ratio stands for price to sales ratio.

What Is P/E and P/S Ratio?

The P/E ratio is a number indicating how much investors are willing to pay for $1 of earnings in the company. The P/S ratio is a number indication how much investors are willing to pay for $1 of sales in the company.

Both of these metrics can be used to determine the current market sentiment surrounding a stock. If a stock is low in these metrics, it has negative market sentiment, if it is high, it has positive market sentiment.

When using these ratios to determine a valuation, you want to compare the ratios of the stock you are looking at with other stocks within its sector.

How to calculate P/E and P/S ratio?

P/E Formula - Stock Price / Earnings Per Share
P/S Formula - Market Cap / Annual Revenue

NOTE: Sorry for the audio, it sounds better to listen without headphones. My microphone wasn't properly plugged in which caused the static.

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DISCLAIMER: I am not a financial advisor, my content is not financial advice, it is for educational purposes only, please do your own research and consult professional advice before making investment decisions.

Outro Music: Battle Tower Remix - Kamex

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Видео How To Value A Stock Using P/E Ratio and P/S Ratio Explained (With Formulas) канала Jake Alexander