Investing in stocks based on valuation metrics is a proven strategy for identifying companies with strong upside potential. Although the price-to-earnings (P/E) ratio is widely used to assess value, it becomes less meaningful when a company is unprofitable, operating with thin margins or experiencing volatile earnings.

In such situations, the price-to-sales (P/S) ratio can offer a more useful perspective. By comparing a company’s market value with its revenues, the metric helps investors evaluate how much they are paying for each dollar of sales.

Stocks with low P/S ratios may present attractive opportunities, particularly when supported by solid fundamentals, improving margins and favorable business momentum. However, a low multiple should not be viewed in isolation, as it may also reflect structural weaknesses or limited growth prospects. Used alongside measures of profitability, financial strength and operating performance, the price-to-sales ratio can help uncover undervalued stocks with meaningful upside potential.

PRA Group, Inc. (PRAA Quick QuotePRAA - Free Report) , Tutor Perini Corporation (TPC Quick QuoteTPC - Free Report) , HF Sinclair Corporation (DINO Quick QuoteDINO - Free Report) , Green Plains Inc. (GPRE Quick QuoteGPRE - Free Report) and PBF Energy Inc. (PBF Quick QuotePBF - Free Report) are some companies with low price-to-sales ratios and the potential to offer higher returns.

What Is the Price-to-Sales Ratio?

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

A stock’s price-to-sales ratio reflects how much investors pay for each dollar of revenue generated by a company.

If the price-to-sales ratio is 1, investors are paying $1 for every $1 of revenue generated by the company. A stock with a price-to-sales ratio 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.

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

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

Screening Parameters

Price-to-Sales less than the Median Price-to-Sales for its Industry: The lower the price-to-sales ratio, the better.

Price-to-Earnings using F(1) estimate less than the Median Price-to-Earnings for its Industry: The lower, the better.

Price-to-Book (Common Equity) less than the Median Price-to-Book for its Industry: This is another parameter to ensure the value feature of a stock.

Debt-to-Equity (Most Recent) less than the Median Debt-to-Equity for its Industry: A company with less debt should have a stable price-to-sales ratio.

Current Price greater than or equal to $5: The stocks must be trading at a minimum of $5 or higher.

Zacks Rank less than or equal to 2: Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks are known to outperform, irrespective of the market environment.

Value Score less than or equal to B: Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best opportunities in the value investing space.

Here are five of the 14 stocks that qualified the screening:

PRA Group is a global financial services company operating primarily in the United States and Europe, with a smaller presence in South America, Canada and Australia. Its core business involves purchasing, collecting and managing portfolios of non-performing loans. The company primarily acquires unpaid consumer obligations from banks, consumer finance companies, auto finance providers and other creditors, generally purchasing these portfolios at a discount to their face value.

PRA Group continues to improve collection performance by leveraging its proprietary recovery database, predictive analytics, digital engagement tools and legal collections to maximize recoveries from purchased portfolios. The company continues to benefit from stronger collection execution, disciplined portfolio purchases and a more scalable operating model. Its broad international footprint, proprietary data and growing use of AI support better portfolio selection, recovery efficiency and long-term earnings potential. PRAA has a Value Score of B and currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tutor Perini provides diversified general contracting, construction management and design-build services to public agencies and private-sector clients in the United States and the international markets. The company’s fundamentals are strengthening, supported by robust demand across civil, building and specialty contracting markets. Revenue growth, improved project execution and a more favorable project mix are supporting stronger operating profitability and margin expansion. Healthy cash generation enhances financial flexibility, while refinancing efforts should reduce financing costs and support balance-sheet efficiency.

The company’s large backlog and continued awards provide solid revenue visibility, particularly across infrastructure projects. Management is also maintaining disciplined capital allocation while returning cash to shareholders. Key risks include project execution, cost inflation, the timing of awards and collections, and potential volatility from large fixed-price construction contracts. TPC presently flaunts a Zacks Rank #1 and a Value Score of B.

Headquartered in Dallas, TX, HF Sinclair is an independent energy company producing and marketing gasoline, diesel, jet fuel, renewable diesel, lubricants and specialty products. The company’s refining system remains the primary earnings driver and operates seven complex refineries across the Mid-Continent, Southwest, Rocky Mountains and Pacific Northwest. HF Sinclair continues to invest in projects designed to improve feedstock access, product yields and logistics flexibility rather than relying solely on favorable refining cracks.

The company’s investments in the El Dorado vacuum furnace project, its Go-West initiative and its marketing business should help HF Sinclair process crude more efficiently, move fuel to where it is needed and sell products in markets offering better opportunities. Additionally, HF Sinclair’s renewable diesel platform has become a more constructive contributor as credit values, tax benefits and operating volumes support profitability. DINO currently sports a Zacks Rank #1 and has a Value Score of A.

Green Plains produces and markets low-carbon fuels and value-added ingredients, while providing grain procurement, storage, commodity marketing and related agribusiness services in the United States and the international markets. The company’s fundamentals are improving, supported by stronger ethanol economics, better operating efficiency, tighter cost control and growing contributions from its low-carbon platform.

The company has returned to profitability, expanded margins and generated healthier operating cash flow, strengthening its ability to fund operations and improve the balance sheet. Management remains focused on reliable plant performance, disciplined capital allocation and debt reduction, which should support financial resilience. GPRE has a Value Score of A and a Zacks Rank of 2 at present.

Parsippany, NJ-based PBF Energy benefits from a geographically diversified refining network that provides flexibility in sourcing crude, optimizing operations and supplying multiple regional markets. Its complex refining system enables the processing of a broad range of crude types while producing higher-value refined products, supporting profitability as market conditions evolve. The company also maintains a relatively conservative balance sheet with solid liquidity, providing financial flexibility and resilience through refining cycles while supporting its focus on reducing debt when conditions allow.

In addition, PBF continues to advance its Refining Business Improvement program, which is aimed at lowering costs and improving operational efficiency. These initiatives are expected to enhance refinery performance, reduce operating and capital expenditure, and strengthen long-term earnings potential, positioning the company to benefit from improved reliability and disciplined execution. PBF currently sports a Zacks Rank #1 and has a Value Score of A.