R/Justified_PS.R

In JancoS/EquityR: Common stock valuation methods. Including single stage DDM, multistage DDM and basic CF models. Package mainly builds on the tidyquant and finreportr packages.

#' @title Justified_PS
#' @description Calculate the justified Price to Sales using fundamentals
#' @param Ticker The symbol of the stock to be evaluated
#' @param Req The required return on equity
#' @param growth_rate Optional growth_rate as percentage, otherwise calculated using Growth_Rate function
#' @export
#' @return Just_PS The justified PS output

Justified_PS <- function(Ticker, Req, growth_rate = 0) {

  # Get the latest date and data

  Tod <- lubridate::today() - lubridate::days(1)

  MData <- tq_get(Ticker, get = "key.ratios")

  Price <- tq_get(Ticker, get = "stock.prices", From = Tod)

  # Get the Retention ratio

  Fin <- MData %>% filter(section  == "Financials") %>%
    select(data) %>% unnest()

  PR <- Fin %>% filter(category == "Payout Ratio % *")
  Ear <- Fin %>% filter(category == "Revenue USD Mil")
  NI <- Fin %>% filter(category == "Net Income USD Mil")

  Payout_Ratio <- Fin %>%
    mutate(Payout_Ratio = value/100) %>%
    filter(row_number() == nrow(PR)) %>% pull(Payout_Ratio)

  NI_latest <- NI %>%
    filter(row_number() == nrow(NI)) %>% pull(value)

  Ear_latest <- Ear %>%
    filter(row_number() == nrow(Ear)) %>% pull(value)


  # Get the growth rate

  if (growth_rate == 0) {

    growth_rate <- Growth_Rate(Ticker)

  } else {

    growth_rate <- growth_rate/100

  }

  # Calculate the justified PS ratio: E/S *(1-b)*(1+g)/(r-g)

  Justified_PS <- ((NI_latest/Ear_latest)*(Payout_Ratio)*(1+growth_rate))/(Req - growth_rate)

  # Get the PB from Morningstar

  PS_Morningstar <- MData %>% filter(section == "Valuation Ratios") %>%
    select(data) %>% unnest() %>%
    filter(category == "Price to Sales") %>%
    filter(row_number() == nrow(ROE)) %>%
    pull(value)

  Just_PS <- list(Justified = Justified_PB, Morningstar = PB_Morningstar)

  return(Just_PS)

}