What does price / sales mean?

How many dollars investors pay for each dollar of the company's annual sales.

How do you interpret price / sales?

Useful when earnings are negative or volatile (e.g. early-stage or cyclical firms). Only comparable across companies with similar margins — a sales dollar is worth more at a high-margin business.

How does price / sales compare across companies?

Best compared within a margin cohort; a software P/S and a retailer P/S are not directly comparable.

Constellation Brands STZ Price / sales

Price / sales at other companies

Keurig Dr PepperKDP

2.1×-0.9×

PepsiCoPEP

2.2×0.0×

Monster BeverageMNST

8.1×+0.4×

Coca-ColaKO

6.6×+0.1×

StarbucksSBUX

2.7×-0.4×

Other financials

Income statement

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Revenue$1.9B-11.3%

Gross profit$951.7M-14.6%

Operating income$441.6M—

Net income$201.8M+154%

Balance sheet

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Cash & equivalents$102.4M+50.4%

Total debt$10.6B-1.0%

Total equity$8.1B+17.4%

Total assets$21.9B+1.2%

Cash flow

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Operating cash flow$562.8M-5.4%

CapEx$218.9M-22.5%

Free cash flow$343.9M+10.2%

Valuation

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Market cap$23.83B—

Enterprise value$34.34B—

P/E14.1×—

Profitability

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Gross margin51.6%-0.5pp

Operating margin29.8%—

Net margin18.5%+17.7pp

Returns & leverage

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Return on equity22.5%+21.6pp

Debt / equity1.3×-0.2×

Current ratio1.1×+0.2×

Questions, answered.

What does price / sales mean?: How many dollars investors pay for each dollar of the company's annual sales.
How do you interpret price / sales?: Useful when earnings are negative or volatile (e.g. early-stage or cyclical firms). Only comparable across companies with similar margins — a sales dollar is worth more at a high-margin business.
How does price / sales compare across companies?: Best compared within a margin cohort; a software P/S and a retailer P/S are not directly comparable.