@article {Nathan17, author = {Siva Nathan and Kumar Sivakumar and Jayaraman Vijayakumar}, title = {Returns to Trading Strategies Based on Price-to-Earnings and Price-to-Sales Ratios}, volume = {10}, number = {2}, pages = {17--28}, year = {2001}, doi = {10.3905/joi.2001.319458}, publisher = {Institutional Investor Journals Umbrella}, abstract = {We examine returns to trading strategies based on values of the Price-to-Earnings (P/E) and Price-to-Sales (P/S) ratios. We show that the excess returns to trading strategies based on the P/S ratio is significantly higher than those for the more commonly used P/E ratio. We also show that using a combination of both the P/S and P/E ratios provides excess returns higher than strategies using these ratios individually. These results are robust across exchange listings and firm size. Finally, we document superior excess returns using a trading strategy based on the tendency of certain industries to have low or high P/E and P/S ratios.}, issn = {1068-0896}, URL = {https://joi.pm-research.com/content/10/2/17}, eprint = {https://joi.pm-research.com/content/10/2/17.full.pdf}, journal = {The Journal of Investing} }