Unprofitable growth stocks can be incredibly frustrating to try and value.

Take $U, for example. Its P/S has dropped from above 50 to just 9 in the last year.

Great! But what the hell does that mean?

That's where this overly-simplistic trick comes in.

Since we have no idea what its potential profitability could become once it matures, let's project them to have a 10% profit margin (slightly below the S&P 500 median).

This assumption flips the P/S figure of 9 on its head and gives us a P/E of 90 -- based on that 10% margin. (P/S of 9 divided by Profit Margin of .1 = Projected P/E of 90)

Obviously, this is a MASSIVE assumption and just a thought experiment as a simple way to wrap your mind around a stock's P/S.

However, (at least in my weird mind), this gives me a tangible feeling of what its earnings potential costs at today's price.

Of course, we can adjust this 10% profit margin to meet the realities of any stock.

Consider $CPNG. Management guides for long-term EBITDA margins of 10% -- so it is more realistic to give them a profit margin of 5% over the long haul.

Trading at just 1.2 times sales, this 5% profit margin would create a projected P/E of 24. (1.2/.05=24)

Once again, I am taking significant liberties, saying that Coupang will ever get to a 5% profit margin, but it shows that if it can get there in time, its growth looks enticing at these prices.

I might get crushed for making such assumptions, and I realize this is very over-simplified.

Still, I was curious if you all had a similar type of analysis that you use for unprofitable growth stocks?