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Strategies & Market Trends : JAPAN-Nikkei-Time to go back up?
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To: borb who wrote (3424)8/19/2003 2:54:51 PM
From: Crossy   of 3902
 
Borb,
yes - Price to sales cannot be massaged by extraordinary items as Price to earnings. Top line items (Sales and EBITDA) are usually more "leading" indicators than bottom line indicators. Profit is a "residual" figure. But beware, PSR ratio is "industry specific". Usually you find good picks IN an industry by tabulating Price/Sales ratios and hunting down the low PSR stocks..

another angle: look at turnarounds. first the stocks have no earnings, then just a tiny amount. Those stocks have NEGASTIVE PE ratios or abnormal high ones, yet they are often the best investments. I avoid the PE mania by looking at Gross margin, it's trends and Price/Sales. Debt level of course also needs to be adressed but this is usually a secondary figure, with the exception of wildly leveraged situations..

rgrds
CROSSY
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