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Strategies & Market Trends : Value Investing
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To: Justinfo who wrote (51773)6/25/2013 11:09:53 PM
From: Spekulatius3 Recommendations

Recommended By
Jurgis Bekepuris
Justinfo
sjemmeri

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I use PSR only if other metrics are not applicable, for example in turnaround situation where a company is not profitable. Then you can get an idea about the appreciation potential by comparing the PSR with peers. Of course doing this directly implies that the company may restore profitability (in the end that is the only thing that matters) to the same level than peers going forward.

I do not think PSR is a good way to companies from different business lines or even different business models within the same business (for example asset heavy and asset light companies). I have seen some nonsense articles in seekingalpha or so, that employed a simple PSR screen and they ended up with many low margin pharma distributors as "value stocks". That is utter nonsense, imo.
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