Enterprise value-to-sales compares the enterprise value of a company to its annual sales. The EV/sales multiple gives investors a quantifiable metric of how to value a company based on its sales, while taking account of both the company's equity and debt.

This ratio can be used for spotting recovery situations or for checking that a growth stock has not become overvalued. It comes in handy when a company begins to suffer losses and, as a result, has no earnings with which investors can assess the shares.

Enterprise value-to-sales is an expansion of the price-to-sales valuation, which uses market capitalization instead of enterprise value. It is perceived to be more accurate than P/S because the market capitalization alone does not take a company's debt and cash into account when valuing the company, while enterprise value does.

We don’t recommend using EV ratios for financial companies, especially banks, because the nature of their balance sheet significantly distorts the enterprise value calculated with the standard definition.

Formula

EV / Sales

 

Availability

These ratios combine data from from line item filings and factors that use prices (click here for the line-item reference). Which price is used in the calculation depends on the period. The latest close price is used for ratios that involve the latest financials, like the most recent quarter or the latest trailing twelve fiscal months (TTM). For ratios that involve older financials, like the quarter one year ago, or the TTM one year ago, the price used for the calculation is the average price during the following quarter.

Quarterly values from Income & Cashflow statements are annualized to make the resulting factor more readily comparable with 12-month factors. The annualization is done by multiplying the quarterly figures by approximately 4 (depends on the actual number of days in the period).

You can either use a prebuilt ratio or use the function to define your own.

Function

RatioName(offset,type)
offset: 0-25 (for interim) 0-10 (for annual)
type: QTR (for interim), ANN (for annual), TTM (for trailing twelve months)

For example to screen for stocks whose P/E today is less than their P/E from their previous fiscal 4 quarters enter:

PEExclXor(0,TTM) < PEExclXor(4,TTM)

The above can also be done using prebuilt ratios:

PEExclXorTTM < PEExclXorPTM

Prebuilt Ratios

Prebuilt ratios are available for these periods:

Period	Description	Price	Line Item
Q	Recent Quarter	Close(0)	(0, QTR)
PQ	Prior Quarter	Avg nextQ	(1, QTR)
PYQ	Prior Year Quarter	Avg nextQ	(4, QTR)
TTM	Trailing Twelve Months	Close(0)	(0, TTM)
PTM	Prior TTM	Avg nextQ	(4, TTM) **
A	Recent Annual	Avg nextQ	(0, ANN)
PY	Prior Year	Avg nextQ	(1, ANN)

** PTM offset is 4 , not 1, since it uses interim periods