pe ratio
pe ratio questions and answers
Learn about pe ratio at the number one young investor website Teen Analyst.
Q: What criteria besides PE ratio should you use to pick a mutual fund?
A: Look at their top ten or top twenty-five holdings (yahoo or msn/cnbc) Do you know what the companies do, have you heard of them....What's their YTD gain? It should be listed...does the fund hold many losers.....what are their biggest gainers? You can check the " ownership or holders" of the various stocks ..they will then list other funds...now check those funds ... when you find one that's not holding many losers..you've got active, aggressive management.....what you are looking for!
Q: What factors affect the PE ratio, EPS and share price in the pharmaceutical industry?
A: Most drugs cost very little to manufacture and generally do not decline in sales. What to watch for then are patent expriations where the product will go to generic and sales will fall drastically. The next most important thing is to review their pipeline, those are the drugs in various phases of FDA approval and how likely they are to be approved and how large a market is projected. Many of the large pharms have poor pipelines so they could be challenged unless they acquire drugs from Biotech generally. Lastly, government regulation can have an effect but most likely it will be limited. For instance the Medicare prescription benefit could have posed a problem but the lobbyists won out so it really did not hurt big pharma. Their is however a minute risk of government intervention in price setting along with a change in favorable tax rules such as Research Credit, earning repatriation, and 936 tax credits that could negatively effect these companies. Lastly, a drug that started hurting people could lead to massive lawsuits. We saw this with Merck but they rebounded but do you remember silicon breast implants? Lawsuits can sink earnings and a company fast.
Q: What are the determinants of the PE ratio for a particular company?
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A: Trailing P/E Ratio, also called P/E (ttm):
Latest closing share price divided by earnings per share based on the last reported 12 months of earnings. Companies with negative earnings receive an "NA," for not applicable.
Q: What is the relationship betweenearnings per share (EPS) and its price-to-earnings (PE) ratio?
A: The P/E ratio is the share price divided by the EPS. (No percentages.)
You can check this calculation on Yahoo Finance or MSN Money & compare it to the listed P/E ratio. Often the two numbers match up well, but sometimes they do not.
Usually the EPS refers to the diluted EPS, which assumes that all outstanding convertible bonds and prefered stocks are converted to common stock. I'm not sure, but I think the standard P/E ratio listing does not use diluted share quantities.
Q: What is a good book to learn about PE ratio's operating expenses and the financial summaries of stocks?
A: If you're serious about it, I would recommend that you go through a good introductory level textbook on finance, and one on financial accounting. The classic finance text is Security Analysis by Graham and Dodd, although some other texts, like Principles of Corporate Finance by Brealey and Myers are more popular these days.
I used Brealey and Myers when I took Intro. to Finance, and I like the text. It's not too heavily mathematical, so you can kind of skim what you don't really need to get into that deeply. You should try to work a few examples along the way, but if you're math-phobic, don't worry about following all of the math.
As for financial accounting, there are many, many texts out there. I used Financial Accounting by Libby, Libby and Short, and it's pretty good. Don't worry too much about getting a current edition, up to date text. As long as it was published in the last couple of decades, and you don't plan on advising people professionally about this kind of stuff, or using derivatives to hedge your portfolio, it'll be fine.
(I always remember that columnist Herb Greenberg has recommended that anyone who wants to understand financial markets should read two books: Graham and Dodd's Security Analysis, and Charles Mackay's Extraordinary Popular Delusions and the Madness of Crowds.)
Q: What is PE ratio, and why is it important?
A: Well it's really just a fundamental stat which shows how much money a company has made.
PE ratio stands for Price/Earnings per share ratio
Earnings per share ratio is calculated by dividing Net Profits by Shares issued
So
Current Price/ (Net Profit/Shares Issued)
The earning per share is an indicator of price growth so a higher PE ratio means higher chance of bigger return but it's used mainly as an investing fundamental rather then trading.
The PE figure is usually measured per year. But figures probably change constantly.
Q: How do you use PE Ratio to determine the best price for a compnay shares, and is there a best PE Ratio and how
A: Different investors use pe differently. Some even ignore it completely. They are called technical analysts. They buy and sell stocks solely on the price and volume action of the stocks. Personally I have a cutoff of about pe 20. I do not normally think about buying stocks with a pe above 20. Too much risk. Interestingly enough there have been many studies done that suggest the higher stock market returns accrue to those who buy value stocks than to those who buy growth stocks (stocks with high pe's). About 1.5% higher.
Q: What is does the PE ratio mean in regard to stocks?
A: http://en.wikipedia.org/wiki/Pe_ratio
Q: what is the significance of PEG rartio? How it is different from PE ratio?
A: the PE, or P/E, is the ratio of Price (of a share) to Earnings (per share).
the PEG is the ratio of the PE, to the forecast growth in earnings per share (EPS) over the mid-term
example: given share, Price is 10, EPS are 1, projected EPS growth next 3 years is 5%
PE or P/E=10/1=10x
PEG=PE/EPSgrowth=10/5=2
hope this helps
Q: How I find out what the PE ratio is for a given index, Russel 2k, Wilshire 5K, SP500?
A: Let me know when you can determine the price earnings ratio on an index. The closest you could determine would be an average, and if you have that gem, what good does it do you? Just my thoughts...
Q: What is the current PE ratio of the BSE sensex?
A: P/E stands for Price / Earnings. You can calculate that yourself next time. But more importantly, P/E is relative to its industry peers. It's not a good idea to judge a stock by only its P/E ratio. In the late 1990's, Ebay's P/E ratio was 400 and it was a good buy.
Q: What is the PE ratio of certain industries within the S&P 500? E.g., what's the PE of tech within the S&P 500?
What is the PE ratio of the financials, within the S&P 500? Energy, and other sectors within the S&P 500?
A: You could use the Yahoo Industry Browser:
http://biz.yahoo.com/p/s_conameu.html
Or you can find them for the various ETFs here:
http://finance.yahoo.com/etf/browser/hl?c=0&k=5&f=0&o=d&cs=1&ce=496
Q: Why does Asta Funding (ASFI) have such a low PE ratio compared to its peers?
A: It does appear that it is about in the middle of the pack. ECPG PE is about 11. ASFI is about 14. FCFC is about 20.
Actually, the company appears to me to be a reasonably sound long term investment.
Q: PE Ratio of Sensex & Nifty?
Can somebody tell me the PE Ratio of Sensex, Nifty, Nifty Junior at present in India?
A: Hi,
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