To evaluate a company, there are many measurement tools to consider. One such tool is the Price to Sales Ratio or P/S ratio. There are two ways to calculate it, although both ways achieve about the same conclusion. The lower the P/S ratio number, the better the value, most people agree. Many investors look for price to sales ratios under 1 to determine how they will act on the stock. Three stocks with low P/S ratios currently are MBIA Inc. (NYSE:MBI), Hecla Mining Company (NYSE:HL), and CONSOL Energy Inc. (NYSE:CNX).
MBIA Inc. (NYSE:MBI) has a price to sales ratio of 0.84, which is well under the industry average. The average ratio for the industry is 22.32. Looking back five years, a person can see that the company’s sales were up 19.30% a year, typically, while the company’s net income dropped by about -33.40%.
As for Hecla Mining Company (NYSE:HL), it closed at about $1.85 a share. It keeps a P/S ratio at 0.19%, which is low than the average for the industry at 1.25. Over the last five years, the company’s sales growth for the full fiscal year stayed at about 9.60% a year, approximately. The earnings per share for the company increased by about 15.60% for its growth rate.
The third stock here is CONSOL Energy Inc. (NYSE:CNX). It keeps a price to sales ratio at 12.21. That is about half of the industry average at 22.57. The price per share, as of last close, was $13.15, with the price down -7.98% so far in 2015. The earnings were at -3.60% typically in the past five years. The average decline rate for the company’s earnings per share was -0.50%.
The P/S ratio, also known as the PSR, is calculated by dividing the per-share stock price by the per-share revenue or it can be found by dividing the market cap for the company by its revenue in the closest year.