Even after the sell-off, U.S. stocks are valued at around 1.4 times annual per-share revenue. FactSet says the average since 2001, when it began tracking the data, is 1.3 times revenue. So the Dow could fall another 7%, or over 1,000 points, and still be no lower than its modern-day average.
And the picture looks even worse when you also add in those companies’ soaring debts. According to the Federal Reserve, nonfinancial corporations have increased their total debts since 2007 from $6.3 trillion to over $8 trillion. As FactSet says, total shares plus total debts — the so-called “enterprise value” — of U.S. public companies are now 2.4 times annual per-share revenue, compared with an average of 2.1 times since 2001.
See also Nearly $8 trillion wiped off world stocks in January, U.S. recession chances rising: BAML.