OPEN-SOURCE SCRIPT
Price to Gross Profit (Market Cap / TTM Gross Profit)
plots price to gross profit.
most useful for growth stocks that are light on earnings due to early stage growth or R&D heavy.
"The Price to Gross Profit ratio (often abbreviated as P/GP or Price/Gross Profit) is a valuation metric calculated as:
P/GP = Market Capitalization ÷ Gross Profit
(or, per-share version: Price per Share ÷ Gross Profit per Share)
It measures how many dollars of market value (or stock price) the market assigns to each dollar of a company's gross profit (revenue minus cost of goods sold / direct costs).
Why It's Useful (Key Advantages Over Common Alternatives)
Better than Price-to-Sales (P/S) for companies with very different gross margins
P/S treats every dollar of revenue the same, but gross margins vary dramatically across industries (software ~70–90%, retail ~20–40%, semiconductors ~50–60%).
→ P/GP normalizes for gross margin efficiency — a high P/S company with fat margins may look cheaper on P/GP than a low-margin business with similar P/S.
Classic example: During the dot-com era (and still relevant today), comparing internet companies like Amazon (lower gross margins) vs. Yahoo or pure ad businesses showed much narrower valuation gaps on P/GP than on P/S.
Especially powerful for early-stage, growth, loss-making, or SaaS/fintech/tech companies
Many high-growth firms have:
Negative net income → P/E useless or negative
Heavy operating expenses / R&D / marketing → EV/EBITDA or P/FCF distorted or negative
→ Gross profit is often positive and growing much earlier than operating profit or net income.
P/GP becomes one of the cleanest ways to compare "how expensive is this growth engine?" among peers burning cash but scaling gross profit strongly.
Less easily manipulated than bottom-line earnings
Gross profit is higher up the income statement and less affected by:
Accounting choices for depreciation, amortization, stock-based comp, one-time items
Operating leverage differences
→ It provides a "purer" view of the core business model's pricing power and cost-of-production efficiency.
Useful in cross-industry or peer benchmarking
When comparing companies in sectors with wildly different expense structures, P/GP helps level the playing field better than P/S and is often more predictive than raw P/E (especially when earnings are volatile or nonexistent).
Variant: EV / Gross Profit
Enterprise value version removes the effect of cash/net debt and is popular in some SaaS and fintech analyses for the same reasons.
Limitations (When It's Less Useful)
Ignores operating expenses, taxes, interest, capex → doesn't tell you if the company can turn gross profit into free cash flow or net earnings
Still revenue-dependent → can be inflated by aggressive revenue recognition
Less meaningful for very mature, high-margin stable companies (where P/E or EV/EBITDA usually dominate)
Not as standardized or widely quoted as P/E, P/S, or EV/EBITDA — you usually have to calculate it yourself
Quick Summary: When to Reach for P/GP
Use it especially when:
Analyzing growth/tech/SaaS/fintech companies
Comparing firms with very different gross margin profiles
P/E is unavailable or misleading
You want a margin-adjusted alternative to P/S
It's not the single best metric for every situation, but it's one of the most under-appreciated "middle ground" valuation tools — cleaner than P/S, more available than P/E or EV/EBITDA in early/high-growth stages. Many value-oriented and growth investors quietly rely on it (or variants like gross profit yield = 1 / P/GP) for exactly these reasons."
most useful for growth stocks that are light on earnings due to early stage growth or R&D heavy.
"The Price to Gross Profit ratio (often abbreviated as P/GP or Price/Gross Profit) is a valuation metric calculated as:
P/GP = Market Capitalization ÷ Gross Profit
(or, per-share version: Price per Share ÷ Gross Profit per Share)
It measures how many dollars of market value (or stock price) the market assigns to each dollar of a company's gross profit (revenue minus cost of goods sold / direct costs).
Why It's Useful (Key Advantages Over Common Alternatives)
Better than Price-to-Sales (P/S) for companies with very different gross margins
P/S treats every dollar of revenue the same, but gross margins vary dramatically across industries (software ~70–90%, retail ~20–40%, semiconductors ~50–60%).
→ P/GP normalizes for gross margin efficiency — a high P/S company with fat margins may look cheaper on P/GP than a low-margin business with similar P/S.
Classic example: During the dot-com era (and still relevant today), comparing internet companies like Amazon (lower gross margins) vs. Yahoo or pure ad businesses showed much narrower valuation gaps on P/GP than on P/S.
Especially powerful for early-stage, growth, loss-making, or SaaS/fintech/tech companies
Many high-growth firms have:
Negative net income → P/E useless or negative
Heavy operating expenses / R&D / marketing → EV/EBITDA or P/FCF distorted or negative
→ Gross profit is often positive and growing much earlier than operating profit or net income.
P/GP becomes one of the cleanest ways to compare "how expensive is this growth engine?" among peers burning cash but scaling gross profit strongly.
Less easily manipulated than bottom-line earnings
Gross profit is higher up the income statement and less affected by:
Accounting choices for depreciation, amortization, stock-based comp, one-time items
Operating leverage differences
→ It provides a "purer" view of the core business model's pricing power and cost-of-production efficiency.
Useful in cross-industry or peer benchmarking
When comparing companies in sectors with wildly different expense structures, P/GP helps level the playing field better than P/S and is often more predictive than raw P/E (especially when earnings are volatile or nonexistent).
Variant: EV / Gross Profit
Enterprise value version removes the effect of cash/net debt and is popular in some SaaS and fintech analyses for the same reasons.
Limitations (When It's Less Useful)
Ignores operating expenses, taxes, interest, capex → doesn't tell you if the company can turn gross profit into free cash flow or net earnings
Still revenue-dependent → can be inflated by aggressive revenue recognition
Less meaningful for very mature, high-margin stable companies (where P/E or EV/EBITDA usually dominate)
Not as standardized or widely quoted as P/E, P/S, or EV/EBITDA — you usually have to calculate it yourself
Quick Summary: When to Reach for P/GP
Use it especially when:
Analyzing growth/tech/SaaS/fintech companies
Comparing firms with very different gross margin profiles
P/E is unavailable or misleading
You want a margin-adjusted alternative to P/S
It's not the single best metric for every situation, but it's one of the most under-appreciated "middle ground" valuation tools — cleaner than P/S, more available than P/E or EV/EBITDA in early/high-growth stages. Many value-oriented and growth investors quietly rely on it (or variants like gross profit yield = 1 / P/GP) for exactly these reasons."
نص برمجي مفتوح المصدر
بروح TradingView الحقيقية، قام مبتكر هذا النص البرمجي بجعله مفتوح المصدر، بحيث يمكن للمتداولين مراجعة وظائفه والتحقق منها. شكرا للمؤلف! بينما يمكنك استخدامه مجانًا، تذكر أن إعادة نشر الكود يخضع لقواعد الموقع الخاصة بنا.
إخلاء المسؤولية
لا يُقصد بالمعلومات والمنشورات أن تكون، أو تشكل، أي نصيحة مالية أو استثمارية أو تجارية أو أنواع أخرى من النصائح أو التوصيات المقدمة أو المعتمدة من TradingView. اقرأ المزيد في شروط الاستخدام.
نص برمجي مفتوح المصدر
بروح TradingView الحقيقية، قام مبتكر هذا النص البرمجي بجعله مفتوح المصدر، بحيث يمكن للمتداولين مراجعة وظائفه والتحقق منها. شكرا للمؤلف! بينما يمكنك استخدامه مجانًا، تذكر أن إعادة نشر الكود يخضع لقواعد الموقع الخاصة بنا.
إخلاء المسؤولية
لا يُقصد بالمعلومات والمنشورات أن تكون، أو تشكل، أي نصيحة مالية أو استثمارية أو تجارية أو أنواع أخرى من النصائح أو التوصيات المقدمة أو المعتمدة من TradingView. اقرأ المزيد في شروط الاستخدام.