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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...
The price earnings ratio (P/E) of each identified peer company can be calculated as long as they are profitable. The P/E is calculated as: P/E = Current stock price / (Net profit / Weighted average number of shares) Particular attention is paid to companies with P/E ratios substantially higher or lower than the peer group.
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 ...
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The 'PEG ratio' (price/earnings to growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share , and the company's expected growth. In general, the P/E ratio is higher for a company with a higher growth rate. Thus, using just the P/E ratio would make high-growth ...
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.
In corporate finance, [1] [2] [3] the present value of growth opportunities (PVGO) is a valuation measure applied to growth stocks.It represents the component of the company's stock value that corresponds to (expected) growth in earnings.