What is Sales per Share?

The term sales per share represents the portion of a company's revenue that is allocated to each share of common stock. The figure can be calculated simply by dividing sales earned in a given reporting period (usually quarterly or annually) by the total number of shares outstanding during the same term. Because the number of shares outstanding can fluctuate, a weighted average is typically used.

The formula for sales per share is:

Sales Per Share = (Sales- Discounts and Returns)/Shares Outstanding

How Does Sales per Share Work?

Let's assume that during the fourth quarter, Company XYZ had sales of $4 million and discounts and returns of $500,000. During the same time frame, the company had 10 million shares outstanding. In this particular case, the company's quarterly sales per share would be $0.35, calculated as follows:

($4 million - $500,000)/10 million shares = $0.35

Why Does Sales per Share Matter?

Sales per share is a barometer to gauge a company's productivity per unit of shareholder ownership. As such, even though earnings per share is a key driver of share prices, many analysts look to revenue per share as a 'check' on the reasonableness of a company's valuation. It's important to remember, however, that revenues can often be susceptible to manipulation, accounting changes and restatements.