The “Future Return by P/S Ratio” tab allows users to calculate potential future returns on a stock based on their own assumptions about revenue growth and the company’s future Price-to-Sales (P/S) ratio. This tool is especially helpful for evaluating whether a stock is likely to rise or fall depending on how its valuation multiple evolves over time.

To begin, users enter three key assumptions:

  • The number of years into the future they are projecting,
  • The expected annual revenue growth rate, and
  • The projected future P/S ratio.

Once these inputs are set and calculated, the tool displays the company’s current financial metrics and then shows a range of potential future outcomes. These include returns based on the projected P/S ratio, as well as scenarios where the P/S ratio ends up being 25% or 50% above or below the user’s projection.

By analyzing this range of outcomes, investors can better understand how sensitive their potential gains or losses are to changes in valuation, and whether their assumptions are aggressive, conservative, or balanced.

How to Use the “Assumptions” Section

To calculate projected returns using the Future Return by P/S Ratio model, begin by entering your assumptions into the fields in the Assumptions section:

  1. Years Later – Specify how long you plan to hold the stock (e.g., 5 years).
  2. Annual Revenue Growth (%) – Estimate how fast you believe the company’s revenue will grow each year.
  3. Projected Future P/S Ratio – Enter the P/S ratio you think the company will trade at by the end of your holding period.

Once you’ve filled in these inputs, click “Calculate” to generate the model’s results. The tool will then show you potential future stock prices and gains (or losses) under various scenarios, helping you assess how realistic and rewarding your expectations may be.

How to Read the Current Financials Table

After clicking “Calculate,” the Current Financials table appears to provide a snapshot of the company’s key metrics as of the selected date. This includes:

  • Current P/S Ratio – The stock’s current price-to-sales multiple.
  • Current Revenue – The total revenue the company is currently generating (in millions).
  • Current Market Cap – The total market value of the company (in millions).
  • Current Price – The current stock price per share.

This table sets the baseline for comparison with future projections, helping you assess how much growth in revenue or changes in valuation would be required to achieve a desired return.

How to Read the Output Tables

Once you click “Calculate”, the Future Return by P/S Ratio tab generates three output tables, each showing a range of possible future outcomes based on different revenue growth scenarios:

  1. Revenue Growth As Projected – Uses the exact revenue growth rate you entered.
  2. Revenue Growth 25% Above Projected – Assumes the company grows revenue 25% faster than you projected.
  3. Revenue Growth 25% Below Projected – Assumes the company grows revenue 25% slower than you projected.

Each table includes six rows, reflecting different assumptions about what the company’s future P/S ratio will be relative to your input. This allows you to see potential gains or losses if the valuation multiple rises or falls instead of matching your forecast.

Column-by-Column Explanation

Each row in the output tables provides one possible outcome based on a different P/S ratio. Here’s how to interpret each column:

  • Future P/S Ratio – The valuation multiple used in each scenario, ranging from 75% below to 50% above your projected future P/S.
  • Revenue Growth – The assumed annual revenue growth rate (either as you entered, or adjusted +25% or -25%).
  • Future Revenue – The total revenue the company would generate at the end of your selected time period based on the revenue growth rate.
  • Future Market Cap – The company’s projected market capitalization, calculated as:
    → Future Revenue × Future P/S Ratio
  • Future Price – The projected share price based on the future market cap and projected share count.
  • Gain (Loss) – The percentage change from the current share price to the future share price under each scenario. This is your projected return (or loss) if that specific combination of growth and P/S ratio occurs.

These tables allow you to quickly assess the range of possible outcomes for your investment depending on how closely the company’s future performance matches your expectations—and whether the market rewards it with higher or lower valuation multiples. It’s a powerful way to stress test your assumptions and visualize both upside potential and downside risk.