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The PEG ratio's validity is particularly questionable when used to compare companies expecting high growth with those expecting low-growth, or to compare companies with high P/E with those with a low P/E. It is more apt to be considered when comparing so-called growth companies (those growing earnings significantly faster than the market).
In fact, if you're used to staring at REIT P/E ratios of 30-50, you'd probably think REITs are downright cheap when you look at P/FFO. A REIT's P/FFO is a really good way to work out a theoretical ...
The goal of this article is to teach you how to use price to earnings ratios (P/E ratios). We'll apply a basic P/E... Why High Fashion International Limited's (HKG:608) High P/E Ratio Isn't ...
When you buy stock, you're essentially buying a tiny piece of the company it represents. Understanding how profitable the company is in relation to its stock price can be an important consideration...
Robert Shiller's plot of the S&P 500 price–earnings ratio (P/E) versus long-term Treasury yields (1871–2012), from Irrational Exuberance. [1]The P/E ratio is the inverse of the E/P ratio, and from 1921 to 1928 and 1987 to 2000, supports the Fed model (i.e. P/E ratio moves inversely to the treasury yield), however, for all other periods, the relationship of the Fed model fails; [2] [3] even ...
Given any ratio, one can take its reciprocal; if the ratio was above 1, the reciprocal will be below 1, and conversely. The reciprocal expresses the same information, but may be more understandable: for instance, the earnings yield can be compared with bond yields, while the P/E ratio cannot be: for example, a P/E ratio of 20 corresponds to an ...
Investors seeking high current income and limited capital growth prefer companies with a high dividend payout ratio. However, investors seeking capital growth may prefer a lower payout ratio because capital gains are taxed at a lower rate. High growth firms in early life generally have low or zero payout ratios.
Math: the four-letter word you can say on TV yet so reviled that people go great lengths to avoid it, even when they know doing so puts their financial well-being in peril. Wait! Don't click away.