For Immediate Release

Chicago, IL – January 21, 2020 – Stocks in this week’s article are Janus Capital Group, Inc (JHG-Free Report) , PG&E Corp. (PCG-Free Report) , J. Alexander's Holdings (JAX-Free Report) , Hilltop Holdings Inc. (HTH-Free Report) and Fiat Chrysler Automobiles N.V. (FCAU-Free Report) .

Tap These Value Stocks with Impressive Price-to-Sales Ratios

When considering valuation metrics, price-to-earnings ratio has always been the obvious choice. This is because calculations based on earnings are easy and come in handy. However, price-to-sales has emerged as a convenient tool to determine the value of stocks that are incurring losses or are in an early cycle of development, generating meager or no profits.

While a loss-making company with a negative price-to-earnings ratio falls out of investor favor, its price-to-sales could indicate the hidden strength of its business. This underrated ratio is also used to identify a recovery situation or ensure that a company's growth is not overvalued.

A stock’s price-to-sales ratio reflects how much investors are paying for each dollar of revenues generated by the company.

If the price-to-sales ratio is 1, it means that investors are paying $1 for every $1 of revenues generated by the company. So, it goes without saying that a stock with a price-to-sales below 1 is a good bargain, as investors need to pay less than a dollar for a dollar’s worth.

Thus, a stock with a lower price-to-sales ratio is a more suitable investment than a stock with a high price-to-sales ratio.

Price-to-sales is often preferred over price-to-earnings as companies can manipulate their earnings using various accounting measures. However, sales are harder to manipulate and are relatively reliable.

However, one should keep in mind that a company with high debt and low price-to-sales is not an ideal choice. The high debt level will have to be paid off at some point, leading to further share issuance, rise in market cap and ultimately a higher price-to-sales ratio.

In any case, the price-to-sales ratio used in isolation cannot do the trick. One should also analyze other ratios like Price/Earnings, Price/Book and Debt/Equity before arriving at any investment decision.

For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/726288/tap-these-7-value-stocks-with-impressive-pricetosales-ratios

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