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Technology Stocks : TLAB info?
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To: Leo who wrote (1784)12/17/1997 12:41:00 PM
From: Chuzzlewit  Read Replies (2) of 7342
 
Lee, PSR is price to sales ratio, and is sometimes used by fundamental analysts to identify proper price ranges for stocks. IMO, it is really meaningless because it fails to take into account two of the major drivers for stock prices: earnings per share and expected growth. For example, low margin high volume businesses generating very low PSR (like supermarket chains) may have exactly the same PSR as growing, high margin tech businesses like TLAB. The second issue is growth. All other things being equal, growth stocks are worth more than their non-growth rivals. This means, among other things, the P/E's will be higher and PSR will be higher.

Of all the parameters you might watch for valuation purposes PSR is one of the worst (ranking slightly above book value in my opinion).

Regards,

Paul
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