Valuation (P/S)
Tier 1 · Existential Pillars · 1.5× weightAre you paying a fair price relative to what the company earns?
Price-to-Sales ratio compares market capitalization to trailing twelve-month revenue, providing a valuation anchor that functions across all profitability stages. Unlike P/E, P/S remains calculable and meaningful for pre-profit growth companies. The score applies growth modifiers — strong revenue growth justifies a premium multiple, while weak growth with a rich valuation flags elevated risk.
Valuation is the price you pay — and price matters even for great businesses. Overpaying for quality is still overpaying. P/S standardizes valuation across growth stages so early-stage and mature companies can be evaluated on the same framework.
Sector ceilings define what 'expensive' means in context. A 7× P/S reads as fair value for a SaaS company but dangerously stretched for an industrial manufacturer. Each sector has its own ceiling reflecting typical institutional valuation ranges.
Significantly undervalued vs sector ceiling with strong growth
Within fair value range for the sector
Materially above sector ceiling with weak or declining growth