What Is a Good P/S Ratio? It Depends on the Sector

What is a good P/S ratio?

A good P/S ratio is one that is low compared with other companies in the same sector. There is no single number that is good for every stock. Across the stocks in our database, the median P/S ratio runs from 0.95 in Consumer Staples to 3.24 in Real Estate. A ratio of 2 is cheap for one sector and expensive for another.

What the P/S ratio tells you

The price-to-sales ratio divides the market value of a company by its yearly revenue. A P/S ratio of 2 means investors pay 2 dollars for every dollar of sales. It is useful for companies with little or no profit, because sales are almost always positive.

Sales are not profit, though. A company that keeps 30 cents of every dollar can carry a much higher P/S ratio than one that keeps 2 cents. That is the main reason the ratio differs so much between sectors.

P/S ratio by sector: the medians in our database

These are the sector medians from the Fair Value Calculator database as of October 18, 2026. Half of the stocks in each sector sit below the median.

• Consumer Staples: 0.95
• Consumer Discretionary: 0.98
• Materials: 1.26
• Communication Services: 1.34
• Industrials: 1.39
• Energy: 1.54
• Utilities: 1.89
• Information Technology: 2.25
• Health Care: 2.62
• Financials: 3.07
• Real Estate: 3.24

The full table with quartiles and 169 industries is on our page P/S ratio by industry. The values move every day with prices.

How to judge a P/S ratio in three steps

• Compare within the sector. A ratio below the sector median is low for that sector, one above the upper quartile is high.
• Look at the margin. A high P/S ratio is easier to justify when the company turns a large part of its sales into profit.
• Look at growth. Fast-growing sales can make a high ratio fall quickly, shrinking sales can make a low ratio a trap.

A simple example with made-up numbers

Take two made-up companies with a P/S ratio of 1.5 each. The first is a grocery chain: its sector median is 0.95, so 1.5 is well above its peers. The second is a software company: its sector median is 2.25, so 1.5 is below its peers. Same ratio, opposite reading.

Check a stock yourself

Type any company into the free Fair Value Calculator to see its P/S ratio next to its sector and its fair value. To browse a whole sector, open for example Information Technology stocks or Consumer Staples stocks. You can also work the ratio out by hand with the P/S ratio calculator.

A low P/S ratio alone does not make a stock a good buy. It is one signal among several. Not investment advice.

Not financial advice and not a buy or sell recommendation. Valuations are model-based and may be wrong; past performance does not indicate future results.