Price to Earnings (#PE) ratio, also known as price multiple or earnings multiple is the ratio obtained by dividing the current share price by earnings per share (#EPS).
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Thread Threadexplaining #PE Ratio & #PEG Ratio & its use in #FundamentalAnalysis
(Must read for #FA learners)
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Views Welcome👉@dmuthuk @Vivek_Investor @datta_arvind @caniravkaria @FI_InvestIndia
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Price to Earnings (#PE) ratio, also known as price multiple or earnings multiple is the ratio obtained by dividing the current share price by earnings per share (#EPS).
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P/E ratio is a reflection of the market's opinion of the earnings capacity & future business prospects of a company.
Companies which enjoy high investor confidence & have a higher market standing usually command high P/E ratio.
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On the face, it would seem that companies with low P/E ratios would offer most attractive investment opportunities. This is not always true.
Companies with high current earnings but dim future prospects often have low P/E ratio.
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As an #investor your primary concern is with future prospects of a company & not so much with its present performance.
This is why companies with low current earnings but bright future prospects usually command high P/E ratio.
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Better to invest in a stock with P/E ratio of 30 having good future growth prospects rather than investing in a stock having low P/E ratio of 5 or 6 but has an uncertain or bleak future growth prospects.
But at the same time never buy companies with too high valuations.
Hence its always advisable to judge #PE ratio in conjunction with prospects of future earnings & growth of the company. This can be done using P/E ratio in conjunction with #PEG ratio.
@caniravkaria @Arpit1223 @FI_InvestIndia
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Price/Earnings to Growth (#PEG) ratio is calculated dividing company’s P/E ratio by growth rate of its earnings for a specified time period.
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PEG ratio gives a better picture about valuation of a company as compared to P/E ratio since it takes into consideration the company's earnings growth.
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In case of companies having high growth rates, their P/E ratio might be high & in such cases using just P/E ratio these high-growth companies would appear overvalued relative to others & in such cases better to use PEG ratio to get clear picture about company’s valuation.
#investor can use PEG ratio to know if a stock is overvalued or undervalued.
✅PEG ratio greater than 1 means stock is relatively expensive.
✅PEG ratio lower than 1 means stock is below its fair value.
✅PEG ratio will be negative when there is de-growth in earnings.
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In the Spring of 2017, after a deep dive into the Fake News phenomena, the security team wanted to publish an update that covered what we had learned. At this point, we didn’t have any advertising content or the big IRA cluster, but we did know about the GRU model.
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In the end, the difficult question of attribution was settled by us pointing to the DNI report instead of saying Russia or GRU directly. In my pre-briefs with members of Congress, I made it clear that we believed this action was GRU.
