Tuesday , 12 December 2017


Tag Archives: PE ratio

The P/E Ratio: Its Strengths and Limitations

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When it comes to valuing stocks, the price-to-earnings (P/E) ratio is the number one metric for investors that want an instant fix on what the market thinks of a company. [That being said]...there are health warnings to heed if you don’t want to be left exposed by its limitations. [Let me explain.] Words: 1101

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PEG Ratio Helps Identify Over & Under Valued Sectors & Stocks

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Simply because the P/E for a sector or individual stocks is high does not necessarily mean the sector or stock is overvalued. Importantly, the P/E should be compared to the earnings growth rate for each sector or company. By dividing the P/E by the earnings growth rate, one obtains the PEG ratio (PE to growth rate.) This article compares each sector’s P/Es to each sector’s PEG ratio and comments on which sectors are over and under valued.

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What Does the Forward PE Ratio Tell Us – REALLY?

investing

The forward price/earnings (PE) ratio is probably the most popular way to measure value in the stock market - when the forward PE is above average, the market is expensive and future returns will be low and, when the PE ratio is below average, the market is cheap and future returns will be high. Putting such popular rules of thumb aside, what does the forward PE really tell us?

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Is the S&P 500 Overvalued? Here’s an Assessment

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The S&P 500 has rallied for three years in a row, without a significant correction. This puzzles many observers who consider equities to be overvalued. Many experts predicted a correction (or worse) this year - after predicting one last year which has not happened - so how high is the S&P 500 valuation, after all?

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Will It Be Different This Time? Will the Dow and S&P 500 Go Up, UP and Awaaay?

investing

Since the late 1800's, the Dow has experienced three periods where it traded sideways, ranging from 13 to 17 years, [which always] resulted in upside breakouts . The S&P 500 finds itself within a few percentage points of where it was 13 years ago [so the question is "Has the time now come for the Dow and S&P 500 to once again go Up, UP and Awaaay?" Let's take a look at some charts.] Words: 299; Charts: 2

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Now's the Time to be Contrarian and Invest in the Stock Market – Here's Why

Can markets find the road back to positive territory? [There are] three reasons investors should consider [before deciding whether to] remain in equities or...sit on the sidelines, [namely that:] investor sentiment is signaling the market is over-extended to the downside, stocks are trading well below historical valuation trends and the S&P 500 dividend yields are higher than the 10-year Treasury yield. [Let's take a look at each of the three to help you come to a decision. Words: 960

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Check Out This Grading System for Comparing Stocks

Jeremy Siegel offered in his book, Stocks for the Long-Run, several actionable techniques that investors might find beneficial, one of which was a 3 parameter approach to stock valuation called the O-Metrix Grading System. The metrix has been applied to all 30 stocks listed on the Dow Jones Industrial Index and 5 stocks top the list. Below is an explaination of the approach, the formula and the results for all 30 stocks. Words: 985

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