Sales to Stock Price Definition and Explanation

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Quick Definition

Estimates how company sales affects its stock price.

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Sales to Stock Price Formula

Explanation of Sales to Stock Price

The Sales to Stock Price ratio measures the affect of sales on the stock price. This ratio will not be accurate all of the time, as market and economic conditions also can affect the price of the stock. If sales increase and the stock price goes up, then investors had sales expectations that were less than the actual sales. If sales increase and the stock price stays the same or goes down, then investors had sales expectations that were greater than actual sales.

Importance of Sales to Stock Price

An increase or decrease of this ratio usually has to be taken within the context of the company itself, and is best measured over several periods. An increasing Sales to Stock Price ratio is usually negative sign, indicating that sales increased, but the stock price did not increase enough.