Median P/E and P/S Ratios Show Overvaluation

Ned Davis of Ned Davis Research told MarketWatch, “Median price/earnings and price/sales ratios higher than at peaks in 2000 and 2007 are clearly a concern.” The comment is based on data from the firm’s recent study, depicted in the graph below, that suggests particularly high overvaluation based on examining the median price/earnings and price/sales ratios of NYSE-listed stocks. The P/E ratio is 25.6, based on 12-month trailing earnings, and the P/S ratio is 2.16, both… Read More

Get into “The Glitch” — 10 Top Scoring Price-to-Sales Stocks

The Price-to-Sales ratio (PSR) is a measure used by many of the Guru Strategies I run on Validea.com as a way to find undervalued stocks. The ratio, which is simply the market capitalization of the firm divided by the company’s sales, has become more popular over the years as investors look for additional ways to uncover value among publicly traded stocks. The individual who popularized the PSR is Ken Fisher. Fisher, a longtime Forbes magazine… Read More