What Is Price-to-Sales Ratio (PSR)?
PSR shows how many times annual revenue investors are paying for a company. It remains usable when earnings are small or negative, but must be read alongside margins and growth.
PSR formula
PSR = Market capitalization ÷ annual revenue
The equivalent per-share formula is price divided by sales per share. Align the price date and revenue period when comparing companies.
Calculate PSR
Use the same unit for both inputs
Result
Market value per unit of annual revenue
0.50x
Market cap and revenue must use the same currency unit.
Current PSR distribution in Japan
Price date: September 4, 2026
Trailing PSR median
0.78x
Based on trailing-12-month revenue
Forecast PSR median
0.73x
Company forecasts for 3,456 stocks
Trailing interquartile range
0.41x – 1.55x
Range containing the middle 50% of stocks
Stocks with trailing PSR
3,750 / 3,958
208 missing or excluded
Trailing PSR distribution
This covers Japanese stocks with positive revenue and a calculable trailing-12-month PSR.
Median trailing PSR by sector
Sectors with at least 10 stocks. Compare companies with similar revenue models and margins.
Examples from large-cap stocks
This is not a recommendation ranking. It connects price, revenue, trailing PSR and forecast PSR using actual data.
How to interpret PSR
Below 1x
Potentially inexpensive; check weak margins or decline
1–3x
Compare margins and growth with peers
3–5x
Often prices in high growth and gross margins
5x+
Strong expectations; vulnerable to disappointment
These ranges organize interpretation, not investment rules. Profit generated from each unit of sales varies widely, so avoid simplistic cross-sector comparisons.
When PSR helps—and where it fails
Loss-making growth companies
PSR compares valuation before P/E becomes meaningful. Pair it with growth, gross margin and cash burn.
Margins cannot be ignored
A 20% operating margin and a 2% margin do not deserve the same PSR even at identical revenue.
Less useful for financials
Revenue means something different for banks and insurers; P/B and ROE are often more suitable.
M&A and accounting effects
Acquisitions and gross-versus-net presentation can move PSR, so inspect the composition and basis of revenue.
How Stock Club calculates and aggregates PSR
Aggregation rules designed for comparability
- Trailing PSR uses trailing-12-month revenue rather than a partial-year cumulative figure.
- Forecast PSR uses company full-year revenue guidance and is kept separate from trailing PSR.
- Stocks with zero or negative revenue are excluded because the multiple is not comparable.
- The universe is active Japanese equities excluding ETFs and REITs.
- Sector medians are shown only where at least 10 stocks have valid data.
- We publish medians and quartiles rather than an outlier-sensitive mean.
Market data changes with price updates. Figures are reference information for consistent comparison, not investment advice.
PSR FAQ
What PSR is considered cheap?＋
There is no universal threshold. Compare companies within the same sector and business stage, and against their own history.
Is a lower PSR always better?＋
No. It may reflect weak margins, shrinking revenue or heavy capital requirements.
How does PSR differ from P/E?＋
PSR uses revenue while P/E uses earnings. PSR can be calculated for loss-making companies but does not measure profitability.
How do trailing and forecast PSR differ?＋
Trailing PSR uses revenue from the last 12 months; forecast PSR uses company full-year revenue guidance.
When is PSR useful?＋
It is often useful for growth companies whose current profit is depressed by investment, alongside growth, gross margin and cash burn.
Put PSR into practice
Compare PSR, revenue growth and margins in the screener, then pair it with P/E to connect valuation and profitability.