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Finance Dictionary and Glossary of Investment Terms
Price/Sales Ratio
Definition 1.
The latest closing price of the stock divided by the latest 12 months'' sales per share. In recent years, investment theorists have paid increasing attention to sales as an indicator of a company''s prospects. James O''Shaughnessy is a particular proponent of the price/sales ratio; if this number is below 1.5, he considers it an indicator that the stock is undervalued. (O''Shaughnessy is the author of ""What Works on Wall Street"" and manages the Cornerstone family of mutual funds based on his ideas.)
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