PRICE EARNING RATIO
This query is : Resolved
23 January 2010
For determining the value of a share on the basis of price earning ratio, information is required regarding......................
26 January 2010
The P/E looks at the relationship between the stock price and the company’s earnings.
The P/E is the most popular metric of stock analysis, although it is far from the only one you should consider.
You calculate the P/E by taking the share price and dividing it by the company’s EPS.
P/E = Stock Price / EPS
For example, a company with a share price of $40 and an EPS of 8 would have a P/E
of 5 ($40 / 8 = 5).
What does P/E tell you? The P/E gives you an idea of what the market is willing to pay for the company’s earnings. The higher the P/E the more the market is willing to pay for the company’s earnings. Some investors read a high P/E as an overpriced stock and that may be the case, however it can also indicate the market has high hopes for this stock’s future and has bid up the price.
Conversely, a low P/E may indicate a “vote of no confidence†by the market or it could mean this is a sleeper that the market has overlooked. Known as value stocks, many investors made their fortunes spotting these “diamonds in the rough†before the rest of the market discovered their true worth.
What is the “right†P/E? There is no correct answer to this question, because part of the answer depends on your willingness to pay for earnings. The more you are willing to pay, which means you believe the company has good long term prospects over and above its current position, the higher the “right†P/E is for that particular stock in your decision-making process. Another investor may not see the same value and think your “right†P/E is all wrong.
The P/E is the most popular metric of stock analysis, although it is far from the only one you should consider.
You calculate the P/E by taking the share price and dividing it by the company’s EPS.
P/E = Stock Price / EPS
For example, a company with a share price of $40 and an EPS of 8 would have a P/E
of 5 ($40 / 8 = 5).
What does P/E tell you? The P/E gives you an idea of what the market is willing to pay for the company’s earnings. The higher the P/E the more the market is willing to pay for the company’s earnings. Some investors read a high P/E as an overpriced stock and that may be the case, however it can also indicate the market has high hopes for this stock’s future and has bid up the price.
Conversely, a low P/E may indicate a “vote of no confidence†by the market or it could mean this is a sleeper that the market has overlooked. Known as value stocks, many investors made their fortunes spotting these “diamonds in the rough†before the rest of the market discovered their true worth.
What is the “right†P/E? There is no correct answer to this question, because part of the answer depends on your willingness to pay for earnings. The more you are willing to pay, which means you believe the company has good long term prospects over and above its current position, the higher the “right†P/E is for that particular stock in your decision-making process. Another investor may not see the same value and think your “right†P/E is all wrong.
Message likes :
2 times
27 February 2010
THANKS ANKUR
27 February 2010
If the price paid by the holding company for the shares acquired in the subsiduary company is more than the intrinsic value of the shares acquired, the difference is treated as.........................
27 February 2010
CAN ANYONE GAVE EXACT ANSWER
27 February 2010
IS THIS QUESTION A DIFFICULT ONE........?
27 February 2010
NO ANSWER
27 February 2010
IF ANYONE ANSWER........LET ME KNOW IN MY PM AS WELL....
28 February 2010
AS SOON AS ANYONE REPLY....PLEASE COPY THE LINK & SEND IT TO MY PM SO THAT I CAME TO KNOW ABOUT THIS.
PLZZZZZ.........
PLZZZZZ.........
20 March 2010
TODAY ALSO I DON'T GET ANY REPLY
21 March 2010
CHECK THIS:
# PCC IPCC RTP TAX - Students Forum
# RTP CA FINAL TAX - Students Forum
# PCC IPCC RTP TAX - Students Forum
# RTP CA FINAL TAX - Students Forum
04 April 2010
NO PROPER ANSWER
11 April 2010
anyways....THANKS for solving and resolving query
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- HSN Details in IFF/GSTR-1 & in GSTR 9
- Refund of AY 22-23
- Tax on capital gains revoked us 54f
- Should I include march foreign salary received in April in my income for FY 2023-24?
- TDR receipts for agreement holder
- Inventory of finished goods
- Applicability of Ind As to associate of associate
- GST APPLICABILITY ON POLLUTION CHECK SERVICE
- Company Incorporation - CA and directors signing from different states
- Confusion around Form 26QB fields
- MODEL FILLED AUDIT REPORT FOR TRUSTS IN FORM 10B
- 115TD on cancellation of 12A 80G Registration
- MIS MATCH OF INVOICE NUMBER
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- CASE INTIMATION OF LIABILITY UNDER SECTION 73(5)(Rule 142(1A)
- Need to correct "Whether it is last installment " response in Form 26 QB
- GSTR3B IMS Deshboard ( Rec. Solution )
Trending Online Classes
CAclubindia
