S&P 500 Price to Sales Ratio (P/S Ratio)

On this page you'll find the current S&P 500 price to sales ratio (also known as the price to revenue multiple), summary statistics on the maximum, minimum, average, and median P/S reading, and the history of the S&P 500 P/S ratio.

Additionally, find a S&P 500 PS Ratio visualization and calculator, as well as an estimate of the monthly P/S ratio history. This tool contains full-index revenue estimates from the first quarter of 1946 until today.

S&P 500 Price to Sales History Tool

Historical S&P 500 Price to Revenue Ratio

Below is the monthly history of the S&P 500 Price to Sales ratio. Use the S&P 500 Return Calculator to see the most recent data details.

There's a lot of data here – use the accordion below to expand the section and reveal the P/S data.

Using the S&P 500 Price to Sales Ratio Tool

The S&P 500 PS visualization tool lets you zoom in and out on the PS ratio's history. On a desktop or laptop, hover over the graph to see the monthly PS ratio value.

The lower graph is a brush graph to control zoom. Drag the window or move the handles on the right and left of the smaller window to change the historical view in the top graph.

You'll find a few tools on the top right of the main graph. If you expand the hamburger menu, you can export the graph as a png or svg graphic, or export the backing data to a CSV for your analysis.

S&P 500 PS Ratio Summary Statistics

When you loaded the page, the tool automatically tallied up summary statistics for the S&P 500. You'll find:

• Current PS (TTM) – The price to sales ratio using trailing twelve-month revenue for the last date/data pair in the tool
• Average – The average PS over all-time on the S&P 500 and pre-market history, using monthly samples
• Median – The median PS ratio over the history of the S&P 500
• Minimum – The minimum PS ratio found in the dataset
• Maximum – The maximum PS ratio found in the dataset
• Last Data Point – The last 'full month' of sales data, based on when the data for the S&P 500 Return Calculator is updated

What is the Price/Sales Ratio?

The price-to-sales ratio is the price you pay for a security, divided by that security's revenues over some time. For the S&P 500 PS ratio in this post, the Price to Sales ratio is the weighted average trailing twelve-month sales over all component stocks – in the same proportion as the index's market capitalization.

The traditional P/S ratio is measured over one year of revenues – the trailing twelve months. The price to sales ratio is extremely important for valuing early-stage companies which "don't yet have earnings", but can be useful for all firms. Revenue is the most challenging number to fake and comes with the least adjustments. If you can project the eventual economics of a firm, sales numbers and growth can help you value a company.

On an index, there are other advantages when using sales instead of earnings. Revenues do not fluctuate as much as earnings during recessions, as you'll see in my other S&P 500 valuation tools. This helps in tougher times such as 2008-2009, where S&P 500 firms briefly averaged a loss. There is no equivalent 'negative revenue' measure, so as a ratio with a more stable base, it's useful.

Of course, there are disadvantages, too. Because the mix of companies has changed over time, the character of revenues has changed: technology and marketplace companies are a greater mix today than at the index's genesis. The early S&P 500 consisted of mainly industrial firms, while technology firms (especially software companies) often have higher terminal income margins – that is, they produce more earnings per dollar of sales.

Additionally, any multiple needs to take into consideration the prevailing interest rate. (Here's the ten year constant maturity treasury return, for instance). Higher safe interest rates mean investors should want to be more conservative with their investments, meaning they should insist on higher quality sales numbers, earnings, growth, and other metrics versus than when yield is tougher to find.

Can the Price to Sales ratio be used for market valuation?

Yes and no. Price to Sales is a simple tool that roughly shows how revenues are valued over time, but many disadvantages exist to the measure. Ultimately, investors would like to see earnings of some sort, whether measured by operating earnings, cash flow, or some other figure. (Ultimately, free cash flow – a non-GAAP, or Generally Accepted Accounting Principal measure – allows a company to distribute to investors or reinvest.)

As mentioned above, sales ratios are vulnerable to a changing industry mix. Revenues are often closer to earnings (and cash flow!) for high-margin software businesses versus industrial companies. A similar dynamic plays out across other industries in the S&P 500 – we need to be comparing apples to apples when looking over time.

S&P 500 Price to Sales Ratio Sources and Methodology

S&P Dow Jones Indices owns the S&P 500 index, and they also maintain quarterly sales data back to 2000. 

From the first quarter of 2000 until today, the tool uses a transformed version of the S&P 500 data. As a result, there is no individual month or quarter sales data in the tool, only trailing twelve-month sales data informed by S&P and my other sources.

Other Sources

To estimate revenue before 2000, I used a revenue seasonality estimate and three additional revenue estimate series to extend the sales data back to 1946:

• Nonfinancial Corporate Business; Revenue from Sales of Goods and Services, Excluding Indirect Sales Taxes (FSIs), Transactions from the St. Louis Fed's FRED tool. It's sourced from the Federal Reserve's Financial Accounts of the United States Z.1 Report.
  
  The data goes back to 1946, and I used it to estimate sales seasonality by quarter: in short, I used this data to convert the annual series to quarterly series. Where I needed more data through 1945, I extrapolated.
• The Impact of Inflation on ROE, Growth and Stock Prices by Frank K. Reilly.
  
  Reilly lists his sources as S&P 400 and Fortune 500 revenue data, and his set spans 1956-1995 with annual profit margin estimates.
• Ultra-Simple Shiller’s CAPE: How One Year’s Data Can Predict Equity Market Returns Better Than Ten by Thomas Philips and Adam Kobor.
  
  Kobor and Philips list Professor Robert Shiller and Professor Aswath Damadoran as sources. Their revenue estimates use the S&P Data (linked above) plus a "paper copy of the Standard and Poor’s Analysts Handbook" (I can't find a link online to purchase a copy, please get in touch if you can).
  
  Their dataset spans 1946 - 2018 and includes both profit margin and price to sales estimates, and uses S&P Industrials, S&P 400 Industrials, and S&P 425 Industrials revenue data as a proxy in addition to the official S&P 500 sales data.
• Price-To-Sales Ratio Is Less Extreme Ex-Tech by Ploutos on Seeking Alpha. (Ploutos lists Bloomberg as his look-through source in a previous post.)
  
  Their chart goes back to 1990.
• The recession indicators (the grey shading in the S&P PE graph) are from the National Bureau of Economic Research's "peak-to-trough" recession measure. (Note that recession dates may be revised in the future.)

Where needed, monthly S&P earnings and index averages are sourced from Robert Shiller's* compilation of index statistics. Depending on the source type, I either divided the TTM earnings by the profit margin as an input or divided the monthly price by the price to sales ratio.

*Note that Professor Shiller has data from 1871 in his dataset. The S&P 500 in its current form started in 1957, with a smaller index existing since 1926.

Estimating Revenue

When measures were embedded in graphs, I used WebPlotDigitizer to extract measurements from charts.

When multiple data sets overlapped (before 2000), I took a weighted average. I found the two annual series better approximated other sets when overlapping than the Seeking Alpha numbers, so they are weighted higher.

I interpolated (linear) the TTM revenue numbers in the quarterly estimates to convert quarterly data to monthly data.

S&P 500 Price to Sales Ratio Warnings and Disclaimers

Although I am confident that the data in this tool approximates the revenue history of the S&P 500 over time, I cannot guarantee the accuracy of this data. I made tough judgment calls constructing the historical set, and you should not necessarily trust my methodology. Do not make individual investment decisions based on the results of this tool; consult with your personal investment advisor.

The datasets were spliced together from proxies, and in some cases, they may not well estimate the actual S&P 500 results. Therefore, if you want to use S&P 500 revenue data in your investment process, you should construct your own revenue index using a suitable methodology.

The index price is the monthly average closing price. Revenues are the estimated trailing twelve-month revenues. Revenue numbers do not map to exact sales in any particular month. Where there is no sales data in the front month, the tool uses the "last seen sales" (so sales may be duplicated from the previous quarter or two for the most recent data.).

One last warning: data will be revised without warning. The ratio may move materially when revenue data is backfilled after companies report sales.

Other Measures of Market Valuation

As you can see, valuing an index based on sales is a simple tool, but it can show the general mood of investors looking at the S&P 500. 

Here on DQYDJ, I've built several other tools which might give a better indication of a market's value; check them out:

• S&P 500 Price to Peak Earnings
• S&P 500 Price to Earnings
• S&P 500 Profit Margin
• Buffett Indicator (the Market Cap to GDP indicator)
• Bogle Stock Market Valuation Model
• Tobin's Q Market Valuation Model
• Shiller PE – the Cyclically Adjusted PE Ratio
• S&P 500 Rule of 20