Vic, P/S (Price/Sales) is the price of the stock divided by sales per share. For example if company A has a stock price of $4, sales of $1,000,000, and 1M shares outstanding, their sales per share would be $1.00, making their P/S ratio 4.
You also refered to the P/A ratio, I'm assuming that was a typo and you meant P/B (Price/Book). Same logic. If we know a company's book value (Stockholders equity divided by # of shares outstanding) we can divide that into the stock price price for the company's P/B ratio. For example if Company A still has a stock price of $4, has stockholders equity of $1M and has 1M shares outstanding, their book value is $1 per share, therefore their P/B ratio would be 4.
You can see why a company like FTEL, despite it's growth, is hurt by the shear number of shares it has outstanding. It would take enormous stockholder's equity to produce a respectable book value and enormous revenues to set a P/S capable of justifying the current price. I'm not doubting that someday FTEL's revenues and Stockholders equity will be high enough to support the current price, but right not they're not if you look at these ratios which only a BB exchange could love! <ggg>
As far a a book describing TA and all these ratios, I've yet to find one that isn't a bore to read, however, for a great book on finding great undervalued growth stocks I'd recommend "Midas Investing" by Jonathan Steinberg. It's easy reading, goes into some detail on the ratios I've described, has alot of advice you can apply to your stock search right away, and gives a concise formula for how to analyze the important features of an income, balance, and cash flow statements. There is no discussion on TA however.
Hope this helps,
Dave |
