Last Updated: April 2026
As of 2026, the Price-to-Sales (P/S) ratio has demonstrated notable trends that reflect broader market conditions and investor sentiment. The P/S ratio has shown a significant upward trend over the last five years, when it surged from 3.894 (Minimum Range) to 6.925 (Maximum Range)
The current P/S ratio for the S&P 500 in late, 2025 is around 3.3, indicating a significant increase from previous years. As companies continue to report strong revenues, investors will need to monitor these trends alongside other valuation metrics to make informed investment decisions. It boosts investor confidence, particularly in growth-oriented sectors.
This article outlines the latest data on average P/S ratios across various industries.
Price to sales ratio or P/S ratio
The price-to-sales ratio (P/S) is computed by dividing a company’s market capitalization (number of outstanding shares multiplied by the share price) by its total sales or revenue for the previous 12 months. The investment is more appealing if the P/S ratio is low. The price-to-sales ratio (P/S) is computed by dividing a company’s market capitalization (number of outstanding shares multiplied by the share price) by its total sales or revenue for the previous 12 months.
What is the price to sales or P/S ratio?
The price-to-sales (P/S) ratio, or PSR, is a valuation metric that compares the stock price of a business to its revenue. It’s a measure of how much the financial markets value each dollar of a company’s sales or profits. It indicates how much money investors are ready to pay for a stock per dollar of sales. Divide the stock price by the underlying company’s sales per share to get the P/S ratio. A low ratio may suggest that the stock is cheap, while a high ratio may be overpriced.
How does the price to sales ratio or P/S ratio work?
The price-to-sales ratio (P/S) is computed by dividing a company’s market capitalization (the number of outstanding shares multiplied by the share price) by its total sales or revenue for the previous 12 months. The investment is more appealing if the P/S ratio is low. The P/S ratio is a valuable metric for evaluating equities. It looks at a company’s market capitalization and revenue to see if it’s overvalued or undervalued. The price-to-sales ratio reveals how much each dollar of a company’s sales is worth in the market. This ratio might be useful in determining the value of growth stocks that have yet to make a profit or have had a brief setback.
How to calculate price to sales ratio?
The P/S ratio determines whether a firm is cheap or overpriced in comparison to its peers. This measure will assist you in determining the company’s desirability within its industry.
Price to sales Ratio Formula
The entire sales value may be seen on the income statement, as well as the total number of outstanding shares, which can be located in the notes section of the same document.
The value of the price to earnings ratio, like other financial measures, can fluctuate every day thus it’s critical that the valuation is time stamped. The P/S ratio is not the company’s real value but rather its predicted value, which is then used to determine the genuine value and compare it to other firms in the same industry.
Example of Calculation
A toy company’s share price and sales per share. The price-to-earnings ratio (10/8 = 1.25) is also calculated. Over three years, the company’s stock price soared by 50%, although sales per share increased at a slower rate. It basically means that investors are now paying more for shares than they were three years ago.
When we look at the P/S ratio, we can see that in Year 1, investors paid $1.25 per share, but in Year 3, they paid $1.50 per share. A rise in the P/S ratio can be caused by a number of things.
Why is the price to sales ratio important in business valuation?
When contrasted to its market share price, a price-to-sales ratio can assist identify a firm that is either undervalued or overpriced. Because revenue data is often more difficult to alter or adjust than a firm’s net income or book value, investment gurus may rely largely on the price-to-sales ratio. Whether the truth is good or negative, investors want to know. Sales-to-price ratios identify a company’s strength without taking into account operational expenditures, which might be altered in the past.
How do investors get benefits from the price to sales ratio?
For firms that have had periods of tremendous early success, investors boost expectations to unreasonable heights. When such firms’ profits decline or fail to meet investors’ excessive expectations, stock prices plummet as investors overreact and sell. Good firms’ sales are generally stable over time, are relatively difficult to manipulate, and are less susceptible to accounting tricks.
Disadvantages of price to sales ratio
The most high-level metric of a company’s financial performance is revenue. Even though a thorough grasp of a company’s revenue recognition procedures is required to adjust revenues generated in each quarter appropriately, it is less susceptible to accounting manipulations than net income. However, the P/S ratio has certain severe flaws, such as:
- Revenue per share does not tell the whole story because it ignores the impact of a company’s cost structure and capital structure, i.e. simply generating high revenue isn’t enough because investors are concerned with net wealth addition, which can only be achieved when revenue translates to net income.
- The stock price is impacted by capital structure in the numerator of the P/S ratio, but the denominator does not reflect the impact of financing, creating a possible mismatch between two variables.
- Even while the P/S ratio is less susceptible to accounting fraud, it is not impervious to it. To ensure that income is neither inflated nor underestimated in a period.
What should be the ideal price to sales ratio in your business?
A PSR of less than 0.75 is extremely desirable for non-cyclical and technology firms, although equities with a PSR of 0.75-1.5 are regarded as strong buys. Those having a PSR greater than three are deemed high-risk. A PSR of less than 0.4 is preferred for cyclical equities. Increasing the asset’s life duration arbitrarily or changing the depreciation computation technique can have a significant impact on earnings and profits.
Furthermore, techniques such as delaying or capitalizing expenditures can be used to influence earnings or profits. The price to sales ratio is computed by dividing the stock’s market price by the number of shares sold. It may also be determined by multiplying the company’s market capitalization by its yearly sales. The PSR is commonly used to analyze the value of cyclical equities and is great for assessing firms in the investing phase. The ratio illustrates how many years it takes for a company’s sales to match its market value.
Price-to-sales ratio by industry
One of several stock valuation indicators is the price-to-sales ratio, commonly known as “price/sales”, “P/S ratio”, or “list-price-to-sale-price ratio”. The ratio expresses how much it costs to purchase one share of a corporation in relation to how much revenue it creates for the company. The lower the P/S ratio, in general, the better.
| INDUSTRY | PS Ratio (TTM) as of, APR 2026 |
|---|---|
| Advertising Agencies | 0.88 |
| Aerospace & Defense | 3.14 |
| Agricultural Inputs | 1.37 |
| Airlines | 0.46 |
| Airports & Air Services | 1.36 |
| Aluminum | 1.21 |
| Apparel Manufacturing | 0.82 |
| Apparel Retail | 0.77 |
| Asset Management | 3.14 |
| Auto Manufacturers | 1 |
| Auto Parts | 0.84 |
| Auto & Truck Dealerships | 0.72 |
| Banks - Diversified | 4.05 |
| Banks - Regional | 3.65 |
| Beverages - Non-Alcoholic | 1.99 |
| Beverages - Wineries & Distilleries | 2.23 |
| Biotechnology | 8.4 |
| Broadcasting | 0.87 |
| Building Materials | 3.43 |
| Building Products & Equipment | 2.07 |
| Business Equipment & Supplies | 0.95 |
| Capital Markets | 2.54 |
| Chemicals | 0.81 |
| Coking Coal | 1.7 |
| Communication Equipment | 2.8 |
| Computer Hardware | 3.03 |
| Conglomerates | 1.44 |
| Consulting Services | 1.85 |
| Consumer Electronics | 2.28 |
| Credit Services | 2.16 |
| Diagnostics & Research | 4.39 |
| Discount Stores | 1.11 |
| Drug Manufacturers - General | 4.39 |
| Drug Manufacturers - Specialty & Generic | 3.1 |
| Education & Training Services | 1.66 |
| Electrical Equipment & Parts | 2.69 |
| Electronic Components | 4.29 |
| Electronic Gaming & Multimedia | 2.55 |
| Electronics & Computer Distribution | 0.38 |
| Engineering & Construction | 1.83 |
| Entertainment | 1.69 |
| Farm & Heavy Construction Machinery | 1.22 |
| Farm Products | 1.04 |
| Financial Data & Stock Exchanges | 5.59 |
| Food Distribution | 0.38 |
| Footwear & Accessories | 1.1 |
| Furnishings, Fixtures & Appliances | 0.57 |
| Gambling | 1.59 |
| Gold | 5.03 |
| Grocery Stores | 0.36 |
| Healthcare Plans | 0.42 |
| Health Information Services | 2.44 |
| Home Improvement Retail | 1.03 |
| Household & Personal Products | 1.52 |
| Industrial Distribution | 1.66 |
| Information Technology Services | 1.6 |
| Insurance Brokers | 2.13 |
| Insurance - Diversified | 2.34 |
| Insurance - Life | 1.32 |
| Insurance - Property & Casualty | 1.53 |
| Insurance - Reinsurance | 0.97 |
| Insurance - Specialty | 2.4 |
| Integrated Freight & Logistics | 1.16 |
| Internet Content & Information | 2.07 |
| Internet Retail | 1.39 |
| Leisure | 1.42 |
| Lodging | 2.64 |
| Luxury Goods | 1.32 |
| Marine Shipping | 2.09 |
| Medical Care Facilities | 1.58 |
| Medical Devices | 4.06 |
| Medical Distribution | 0.29 |
| Medical Instruments & Supplies | 4 |
| Metal Fabrication | 2.13 |
| Mortgage Finance | 1.47 |
| Oil & Gas Drilling | 1.36 |
| Oil & Gas E&P | 2.04 |
| Oil & Gas Equipment & Services | 1.74 |
| Oil & Gas Integrated | 1.67 |
| Oil & Gas Midstream | 2.27 |
| Oil & Gas Refining & Marketing | 0.69 |
| Other Industrial Metals & Mining | 0.99 |
| Other Precious Metals & Mining | 5.69 |
| Packaged Foods | 0.88 |
| Packaging & Containers | 1.01 |
| Paper & Paper Products | 0.2 |
| Personal Services | 1.53 |
| Pollution & Treatment Controls | 3.16 |
| Publishing | 1.27 |
| Railroads | 3.18 |
| Real Estate - Development | 4.42 |
| Real Estate - Diversified | 5.36 |
| Real Estate Services | 1.6 |
| Recreational Vehicles | 0.66 |
| REIT - Diversified | 4.97 |
| REIT - Healthcare Facilities | 5.83 |
| REIT - Hotel & Motel | 1.26 |
| REIT - Industrial | 7.84 |
| REIT - Mortgage | 4.39 |
| REIT - Office | 2.4 |
| REIT - Residential | 5.58 |
| REIT - Retail | 7.17 |
| REIT - Specialty | 6.51 |
| Rental & Leasing Services | 1.57 |
| Residential Construction | 1.19 |
| Resorts & Casinos | 1.16 |
| Restaurants | 1.13 |
| Scientific & Technical Instruments | 4.83 |
| Security & Protection Services | 2.5 |
| Semiconductor Equipment & Materials | 4.36 |
| Semiconductors | 4.22 |
| Software - Application | 3.14 |
| Software - Infrastructure | 3.36 |
| Solar | 1.54 |
| Specialty Business Services | 2.38 |
| Specialty Chemicals | 2.14 |
| Specialty Industrial Machinery | 3.3 |
| Specialty Retail | 1 |
| Staffing & Employment Services | 1.08 |
| Steel | 1.01 |
| Telecom Services | 1.5 |
| Thermal Coal | 1.23 |
| Tobacco | 1.04 |
| Tools & Accessories | 1.88 |
| Travel Services | 1.45 |
| Trucking | 1.82 |
| Utilities - Diversified | 2.05 |
| Utilities - Independent Power Producers | 3.88 |
| Utilities - Regulated Electric | 2.9 |
| Utilities - Regulated Gas | 2.13 |
| Utilities - Regulated Water | 4.12 |
| Utilities - Renewable | 2.64 |
| Waste Management | 2.21 |
Price-to-sales (P/S) ratios of one to two are regarded as good, and P/S ratios of less than one are considered exceptional. P/S ratios, like other stock valuation indicators, vary greatly by industry.
Data Source: FullRatio
PS Ratio by Industry: What April 2026 Data Reveals About Market Valuations Across 133 Sectors
For the period of April 2026, across the 133 industries considered, prices to sales (PS) are spread between 0.20x and 8.40x, respectively. That means that for a given $1 in sales, an investor would pay up to 42 times more depending on growth potential and the nature of the business.
Key Trends
- Biotechnology, REITs, and real assets lead the PS ratio rankings. With an EV/Revenue ratio of 8.40 times, biotechnology is ranked first. Other sectors with a high EV/Revenue ratio include REIT-Industrial (EV/Revenue ratio of 7.84 times), and REIT-Retail (EV/Revenue ratio of 7.17 times). This indicates that in the above sectors, the revenue streams generated in the future are more valuable than existing revenues.
- Most industries are found in the 1-2x PS bracket. Out of 133 industries, 48 lie in the 1x to 2x bracket, which is the largest category. This shows that the average and median values are 2.30x and 1.82x, respectively, suggesting that most companies have a market value of roughly 1-2 times their annual income. Industries operating above this range receive premium benefits due to their unique structures.
- The distribution, commodities, and consumer staples segments are heavily discounted to revenues. Paper and Paper Products (0.20x), Medical Distribution (0.29x), Grocery Stores (0.36x), Food Distribution (0.38x), and Healthcare Plans (0.42x) all trade at considerable discounts to the data set’s median value.
| Industry | PS Ratio | Why It Stands Out |
|---|---|---|
| Biotechnology | 8.40x | Highest in entire dataset investors are pricing in future blockbuster drugs, not current revenue |
| REIT - Industrial | 7.84x | 2nd highest logistics and warehouse demand drives premium pricing on industrial real estate income |
| REIT - Retail | 7.17x | High for a traditionally conservative sector e-commerce-resilient retail properties command strong premiums |
| Paper & Paper Products | 0.20x | Lowest in entire dataset declining industry with no growth premium; market values at near-commodity level |
| Healthcare Plans | 0.42x | Despite large revenues, razor-thin margins and regulatory risk keep PS ratios deeply compressed |
What This Means for Founders
- Biotech founders can justify higher revenue multiples, as the sector trades at 8.40x and the market anticipates substantial future product revenues. In contrast, grocery and food distribution startups operate in sectors at 0.36x and 0.38x, where investors prioritize unit economics and margins over revenue size.
- Semiconductor trade at 4.22x; semiconductor software and semiconductor founders benefit from strong market tailwinds. Semiconductors trade at 4.22x, Semiconductor Equipment & Materials at 4.36x, Software – Application at 3.14x, and Software – Infrastructure at 3.36x, all above the 1.82x median. Founders in these sectors must deliver growth rates that justify a 3–4x PS at entry.ng (0.82x), or Airlines (0.46x) should not lead fundraising conversations with top-line revenue growth. The winning pitch instead centers on operational efficiency, margin expansion, and capital discipline because those are the variables investors actually underwrite in sub-1x PS industries.
What This Means for Investors
- REITs combine premium pricing with income stability. Seven of nine REIT sub-sectors trade above 4x PS, with REIT – Industrial at 7.84x and REIT – Retail at 7.17x leading. Industrial and specialty REITs attract the highest market confidence, driven by e-commerce logistics and data center demand.
- Healthcare valuations vary widely by sub-sector. Biotechnology trades at 8.40x, while Medical Distribution is at 0.29x, a 29x difference. Drug Manufacturers – General (4.39x), Medical Devices (4.06x), and Diagnostics & Research (4.39x) have strong premiums, while Healthcare Plans (0.42x) and Medical Care Facilities (1.58x) are much lower. Investing in healthcare without sub-sector specificity is a common analytical error.
- Despite seeming to be undervalued, low-PS sectors with prices under 1x PS are not always a good investment choice. From the 23 industrial sectors that trade under a price-to-sales ratio of 1x PS, many, including the Paper & Paper Products industry with 0.20x PS ratio, Electronics & Computer Distribution at 0.38x PS ratio, and the Oil & Gas Refining & Marketing sector at 0.69x PS ratio, are troubled.
How to Use This Data
Founders can take the PS ratio of the industry and multiply it by the existing or forecasted annual income, thus receiving a fair value range that reflects the market.
For investors, the PS ratio is best used for comparison within the same industry. It makes more sense to compare a biotechnology firm with a PS ratio of 6 to an average PS ratio for the industry of 8.40 rather than to a median PS ratio for the database of 1.82. The use of the PS ratio along with revenue growth is critical because a high PS ratio is valid only if backed by high growth.
Know your business worth with Eqvista’s Valuation!
The Price-to-Sales (P/S) ratio is a vital metric for evaluating companies’ market valuations in relation to their revenue. It is particularly useful in industries where profit margins are low, or companies may not yet be profitable, making traditional earnings-based metrics less applicable.
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