Common Stock Valuation Ratios (Price Multiples)
Difficulty: Beginner
Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).
Current Valuation Ratios
Adobe Inc., current price multiples
| Adobe Inc. | Alphabet Inc. | Facebook Inc. | International Business Machines Corp. | Microsoft Corp. | Oracle Corp. | salesforce.com inc. | Software & Computer Services | Technology | |
|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||
| Current share price (P) | $ 259.45 | ||||||||
| No. shares of common stock outstanding | 487,725,915 | ||||||||
| Growth rate (g) | 11.86% | ||||||||
| Earnings per share (EPS) | $ 5.31 | ||||||||
| Next year expected EPS | $ 5.94 | ||||||||
| Operating profit per share | $ 5.82 | ||||||||
| Sales per share | $ 18.51 | ||||||||
| Book value per share (BVPS) | $ 19.20 | ||||||||
| Ratios (Price Multiples) | |||||||||
| Price to earnings (P/E) | 48.84 | 25.19 | 20.97 | 21.80 | 50.10 | 48.53 | 954.46 | 39.36 | 28.95 |
| Price to next year expected earnings | 43.66 | 22.20 | 18.16 | 15.80 | 45.65 | 41.51 | 989.61 | 34.69 | 25.17 |
| Price-earnings-growth (PEG) | 4.12 | 1.87 | 1.35 | 0.57 | 5.14 | 2.87 | – | 2.92 | 1.93 |
| Price to operating profit (P/OP) | 44.55 | 29.41 | 18.62 | 10.63 | 23.68 | 13.57 | 516.07 | 27.54 | 20.94 |
| Price to sales (P/S) | 14.01 | 5.66 | 8.31 | 1.59 | 7.52 | 4.66 | 11.61 | 7.03 | 5.15 |
| Price to book value (P/BV) | 13.52 | 4.36 | 5.51 | 7.13 | 10.04 | 4.06 | 12.96 | 6.80 | 5.95 |
Based on: 10-K (filing date: 2019-01-25).
If company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.
Otherwise, if company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.
Historical Valuation Ratios (Summary)
Adobe Inc., historical price multiples
Based on: 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20), 10-K (filing date: 2014-01-21).
| Ratio | Description | The company |
|---|---|---|
| P/E ratio | The P/E ratio tells analyst how much an investor in common stock pays per dollar of current earnings. | Adobe Inc.’s P/E ratio increased from 2016 to 2017 but then declined significantly from 2017 to 2018. |
| P/OP ratio | Because P/E ratio is calculated using net income, the ratio can be sensitive to nonrecurring earnings and capital structure, analysts may use price to operating profit. | Adobe Inc.’s P/OP ratio increased from 2016 to 2017 but then slightly declined from 2017 to 2018. |
| P/S ratio | An rationale for the P/S ratio is that sales, as the top line in an income statement, are generally less subject to distortion or manipulation than other fundamentals such as EPS or book value. Sales are also more stable than earnings and never negative. | Adobe Inc.’s P/S ratio increased from 2016 to 2017 but then slightly declined from 2017 to 2018. |
| P/BV ratio | The P/BV ratio is interpreted as an indicator of market judgment about the relationship between a company’s required rate of return and its actual rate of return. | Adobe Inc.’s P/BV ratio increased from 2016 to 2017 and from 2017 to 2018. |
Price to Earnings (P/E)
Adobe Inc., historical P/E calculation, comparison to benchmarks
| Nov 30, 2018 | Dec 1, 2017 | Dec 2, 2016 | Nov 27, 2015 | Nov 28, 2014 | Nov 29, 2013 | ||
|---|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 487,725,915 | 491,578,529 | 494,078,475 | 498,330,407 | 498,314,061 | 496,604,463 | |
| Selected Financial Data (USD $) | |||||||
| Net income (in thousands) | 2,590,774 | 1,693,954 | 1,168,782 | 629,551 | 268,395 | 289,985 | |
| Earnings per share (EPS)3 | 5.31 | 3.45 | 2.37 | 1.26 | 0.54 | 0.58 | |
| Share price1, 2 | 244.95 | 197.84 | 110.71 | 89.18 | 71.49 | 60.85 | |
| Ratio | |||||||
| P/E ratio4 | 46.11 | 57.41 | 46.80 | 70.59 | 132.73 | 104.21 | |
| Benchmarks | |||||||
| P/E Ratio, Competitors | |||||||
| Alphabet Inc. | 25.92 | 59.34 | 28.45 | 29.71 | 24.87 | – | |
| Facebook Inc. | 21.51 | 35.20 | 37.05 | 84.21 | 74.26 | – | |
| International Business Machines Corp. | – | 25.07 | 14.29 | 9.65 | 13.55 | 11.58 | |
| Microsoft Corp. | 50.00 | 26.25 | 26.08 | 30.63 | 16.11 | 12.14 | |
| Oracle Corp. | 45.90 | 22.49 | 18.53 | 17.92 | 16.33 | 12.78 | |
| salesforce.com inc. | 731.11 | 324.94 | – | – | – | – | |
| P/E Ratio, Sector | |||||||
| Software & Computer Services | – | 35.63 | 26.43 | 28.01 | 21.60 | – | |
| P/E Ratio, Industry | |||||||
| Technology | – | 27.19 | 20.90 | 18.72 | 18.58 | – | |
Based on: 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20), 10-K (filing date: 2014-01-21).
1 Data adjusted for splits and stock dividends.
2 Close price on the filing date of Adobe Inc.’s Annual Report.
2018 Calculations
3 EPS = Net income ÷ No. shares of common stock outstanding
= 2,590,774,000 ÷ 487,725,915 = 5.31
4 P/E ratio = Share price ÷ EPS
= 244.95 ÷ 5.31 = 46.11
| Ratio | Description | The company |
|---|---|---|
| P/E ratio | The P/E ratio tells analyst how much an investor in common stock pays per dollar of current earnings. | Adobe Inc.’s P/E ratio increased from 2016 to 2017 but then declined significantly from 2017 to 2018. |
Price to Operating Profit (P/OP)
Adobe Inc., historical P/OP calculation, comparison to benchmarks
| Nov 30, 2018 | Dec 1, 2017 | Dec 2, 2016 | Nov 27, 2015 | Nov 28, 2014 | Nov 29, 2013 | ||
|---|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 487,725,915 | 491,578,529 | 494,078,475 | 498,330,407 | 498,314,061 | 496,604,463 | |
| Selected Financial Data (USD $) | |||||||
| Operating income (in thousands) | 2,840,369 | 2,168,095 | 1,493,602 | 903,095 | 412,685 | 422,723 | |
| Operating profit per share3 | 5.82 | 4.41 | 3.02 | 1.81 | 0.83 | 0.85 | |
| Share price1, 2 | 244.95 | 197.84 | 110.71 | 89.18 | 71.49 | 60.85 | |
| Ratio | |||||||
| P/OP ratio4 | 42.06 | 44.86 | 36.62 | 49.21 | 86.32 | 71.49 | |
| Benchmarks | |||||||
| P/OP Ratio, Competitors | |||||||
| Alphabet Inc. | 30.27 | 28.74 | 23.37 | 24.29 | 21.78 | – | |
| Facebook Inc. | 19.10 | 27.76 | 30.46 | 49.89 | 43.72 | – | |
| International Business Machines Corp. | – | 12.22 | 12.94 | 8.11 | 8.79 | 9.74 | |
| Microsoft Corp. | 23.63 | 24.93 | 21.70 | 20.57 | 12.81 | 9.91 | |
| Oracle Corp. | 12.83 | 16.52 | 13.09 | 12.84 | 12.12 | 9.51 | |
| salesforce.com inc. | 395.31 | 908.77 | 411.51 | – | – | – | |
| P/OP Ratio, Sector | |||||||
| Software & Computer Services | – | 24.93 | 21.61 | 20.87 | 16.32 | – | |
| P/OP Ratio, Industry | |||||||
| Technology | – | 19.67 | 16.53 | 14.33 | 14.28 | – | |
Based on: 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20), 10-K (filing date: 2014-01-21).
1 Data adjusted for splits and stock dividends.
2 Close price on the filing date of Adobe Inc.’s Annual Report.
2018 Calculations
3 Operating profit per share = Operating income ÷ No. shares of common stock outstanding
= 2,840,369,000 ÷ 487,725,915 = 5.82
4 P/OP ratio = Share price ÷ Operating profit per share
= 244.95 ÷ 5.82 = 42.06
| Ratio | Description | The company |
|---|---|---|
| P/OP ratio | Because P/E ratio is calculated using net income, the ratio can be sensitive to nonrecurring earnings and capital structure, analysts may use price to operating profit. | Adobe Inc.’s P/OP ratio increased from 2016 to 2017 but then slightly declined from 2017 to 2018. |
Price to Sales (P/S)
Adobe Inc., historical P/S calculation, comparison to benchmarks
| Nov 30, 2018 | Dec 1, 2017 | Dec 2, 2016 | Nov 27, 2015 | Nov 28, 2014 | Nov 29, 2013 | ||
|---|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 487,725,915 | 491,578,529 | 494,078,475 | 498,330,407 | 498,314,061 | 496,604,463 | |
| Selected Financial Data (USD $) | |||||||
| Revenue (in thousands) | 9,030,008 | 7,301,505 | 5,854,430 | 4,795,511 | 4,147,065 | 4,055,240 | |
| Sales per share3 | 18.51 | 14.85 | 11.85 | 9.62 | 8.32 | 8.17 | |
| Share price1, 2 | 244.95 | 197.84 | 110.71 | 89.18 | 71.49 | 60.85 | |
| Ratio | |||||||
| P/S ratio4 | 13.23 | 13.32 | 9.34 | 9.27 | 8.59 | 7.45 | |
| Benchmarks | |||||||
| P/S Ratio, Competitors | |||||||
| Alphabet Inc. | 5.82 | 6.78 | 6.14 | 6.27 | 5.44 | – | |
| Facebook Inc. | 8.52 | 13.80 | 13.70 | 17.32 | 17.51 | – | |
| International Business Machines Corp. | – | 1.82 | 2.12 | 1.56 | 1.76 | 1.91 | |
| Microsoft Corp. | 7.51 | 6.19 | 5.13 | 3.99 | 4.10 | 3.41 | |
| Oracle Corp. | 4.41 | 5.56 | 4.45 | 4.66 | 4.67 | 3.75 | |
| salesforce.com inc. | 8.89 | 6.96 | 7.09 | 7.82 | 9.54 | 8.92 | |
| P/S Ratio, Sector | |||||||
| Software & Computer Services | – | 6.36 | 5.43 | 4.88 | 4.43 | – | |
| P/S Ratio, Industry | |||||||
| Technology | – | 4.83 | 4.00 | 3.32 | 3.41 | – | |
Based on: 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20), 10-K (filing date: 2014-01-21).
1 Data adjusted for splits and stock dividends.
2 Close price on the filing date of Adobe Inc.’s Annual Report.
2018 Calculations
3 Sales per share = Revenue ÷ No. shares of common stock outstanding
= 9,030,008,000 ÷ 487,725,915 = 18.51
4 P/S ratio = Share price ÷ Sales per share
= 244.95 ÷ 18.51 = 13.23
| Ratio | Description | The company |
|---|---|---|
| P/S ratio | An rationale for the P/S ratio is that sales, as the top line in an income statement, are generally less subject to distortion or manipulation than other fundamentals such as EPS or book value. Sales are also more stable than earnings and never negative. | Adobe Inc.’s P/S ratio increased from 2016 to 2017 but then slightly declined from 2017 to 2018. |
Price to Book Value (P/BV)
Adobe Inc., historical P/BV calculation, comparison to benchmarks
| Nov 30, 2018 | Dec 1, 2017 | Dec 2, 2016 | Nov 27, 2015 | Nov 28, 2014 | Nov 29, 2013 | ||
|---|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 487,725,915 | 491,578,529 | 494,078,475 | 498,330,407 | 498,314,061 | 496,604,463 | |
| Selected Financial Data (USD $) | |||||||
| Stockholders’ equity (in thousands) | 9,362,114 | 8,459,869 | 7,424,835 | 7,001,580 | 6,775,905 | 6,724,634 | |
| Book value per share (BVPS)3 | 19.20 | 17.21 | 15.03 | 14.05 | 13.60 | 13.54 | |
| Share price1, 2 | 244.95 | 197.84 | 110.71 | 89.18 | 71.49 | 60.85 | |
| Ratio | |||||||
| P/BV ratio4 | 12.76 | 11.50 | 7.37 | 6.35 | 5.26 | 4.49 | |
| Benchmarks | |||||||
| P/BV Ratio, Competitors | |||||||
| Alphabet Inc. | 4.49 | 4.93 | 3.99 | 3.91 | 3.44 | – | |
| Facebook Inc. | 5.65 | 7.54 | 6.39 | 7.02 | 6.05 | – | |
| International Business Machines Corp. | – | 8.20 | 9.30 | 8.92 | 13.73 | 8.37 | |
| Microsoft Corp. | 10.02 | 7.69 | 6.08 | 4.66 | 3.96 | 3.36 | |
| Oracle Corp. | 3.84 | 3.90 | 3.49 | 3.66 | 3.82 | 3.13 | |
| salesforce.com inc. | 9.93 | 7.78 | 9.45 | 10.57 | 12.79 | 11.74 | |
| P/BV Ratio, Sector | |||||||
| Software & Computer Services | – | 6.15 | 5.19 | 4.85 | 4.51 | – | |
| P/BV Ratio, Industry | |||||||
| Technology | – | 5.59 | 4.57 | 4.22 | 4.20 | – | |
Based on: 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20), 10-K (filing date: 2014-01-21).
1 Data adjusted for splits and stock dividends.
2 Close price on the filing date of Adobe Inc.’s Annual Report.
2018 Calculations
3 BVPS = Stockholders’ equity ÷ No. shares of common stock outstanding
= 9,362,114,000 ÷ 487,725,915 = 19.20
4 P/BV ratio = Share price ÷ BVPS
= 244.95 ÷ 19.20 = 12.76
| Ratio | Description | The company |
|---|---|---|
| P/BV ratio | The P/BV ratio is interpreted as an indicator of market judgment about the relationship between a company’s required rate of return and its actual rate of return. | Adobe Inc.’s P/BV ratio increased from 2016 to 2017 and from 2017 to 2018. |