P/E ratio

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  • The Predictability Of P / E Ratio

    2021 Words  | 9 Pages

    predictability of P/E ratio and how does it react differently under different conditions; Basu (1977) was one of the main journal this paper heavily depend on which gave us generous knowledge and answers to the predictability of P/E ratio. Basu(1977) concluded low P/E ratio portfolios implied higher return than high P/E ratio portfolios and tested the market efficiency hypothesis. Davis, Aliaga-Diaz and Thomas (2012) qualified the modest predictability of 1-year P/E ratio and 10-year P/E ratio among all

  • Palm Inc Analysis Essays

    1589 Words  | 7 Pages

    volatility, the CFO is looking into better understanding how Palm is valued in the market. Managers/CFOs often use heuristics for valuation purposes as opposed to traditional methods such as the DCF. Metrics such as the ones used by Palm's CFO, the P/E and price-to-sales, are often easier to use and require less research and fewer variables. However, relying on such metrics can lead to the affect heuristic. DCF is the methodology that should be used to ensure the fundamental value is accurate.

  • General Electric, A Global Digital Industrial Company

    1095 Words  | 5 Pages

    they stayed pretty consistent with the market fluctuating back and forth with each other. In 2016 GE outperformed the market significantly. Overall, GE stock increased 16.48% in the last 2 years, whereas S&P 500 only increased 8.9% in those two years. Jensen’s Alpha, Sharpe Ratio, and Treynor Ratio are performance evaluation measures that all have to do with the return the company earned based on the risk that was taken. Jensen’s Alpha takes into account the realized return of the portfolio, realized

  • The Advantages Of The Discounted Dividend Model

    1597 Words  | 7 Pages

    standards vary widely across firms, P/BV ratio can not be comparable across firms. It can be misleading to investors when there are significant differences in the asset intensity of production methods among the firms.Book value may not carry much meaning for service firms which do not have significant fixed assets. The book value of equity can become negative if a firm has a sustained string of negative earnings reports, which lead to a negative P/BV ratio. P/BV can be misleading to investirs when

  • Essay about Financial Analysis of Anz and Nab

    2581 Words  | 11 Pages

    However, a lower P/E ratio can also be generated with one-off abnormal earnings (Phan, 2011). In 2008, share prices dropped mainly due to the US sub-prime crisis, which started in 2007 (Lixi, 2008). This had a huge impact on the P/E ratio for 2008, which is slightly below the threshold of 10 times. The P/E ratio for ANZ was higher than NAB in 2009 and there was lesser fluctuation in ratio. Share prices tend to rise with improved economic conditions

  • Cash Flow Ratios For Investing

    2036 Words  | 9 Pages

    As an investor or shareholder, one needs to learn and know how to calculate financial ratios before investing, otherwise an investor may risk investing in a debt filled firm with low profitability. Financial ratios are primarily tools for turning the data contained in financial statements into information used by managers and executives to better understand what is happening in a company. Like all tools, they can be used for things other than their original design, such as evaluating an acquisition

  • Gmo Case

    1429 Words  | 6 Pages

    Support your answers by examining P/E ratios, price-earnings growth (PEG), and other metrics that may be relevant to the decision. According to the calculations below in Table 1, we analyze each company with the Book-Market (B/M) ratio, Price-Earnings ratio (P/E), Earning per Share (EPS) growth rate and a projected EPS for year 2003 and 2005 using the LT EPS growth rate. Table 1: Ratio Analysis – Cisco, CVS, R.R., Manor, S&P 500 Stock(year 2000E) | B/M ratios | P/E ratios | EPS | LT EPS Growth Rate |

  • Dividend Decision

    2104 Words  | 9 Pages

    Symbolically, P = [m (D+E/3)]  Where P is the market price,  M is the multiplier,  D is dividend per share,  E is Earnings per share.  Drawbacks  of  the  Traditional  Approach:  As  per  this  approach,  there  is  a  direct  relationship  between P/E ratios and dividend pay­out ratio. High dividend pay­out ratio will increase the P/E ratio  and low dividend pay­out ratio will decrease the P/E ratio. This may not always be true. A company’s  share prices

  • The Virtue Of Putting A Financial Stake On The Stocks And Exchange Traded Funds

    775 Words  | 4 Pages

    Group, Inc. (ABG) from Auto Dealership (services) industry B. Equity exchange traded funds (ETFs): 1) Vanguard Dividend Appreciation ETF (VIG); dividends 2) WisdomTree MidCap Dividend Fund (DON); dividends and growth at a reasonable price 3) SPDR S&P Dividend ETF (SDY); currency hedge, dividends and growth at a reasonable price C. Non-equity exchange traded funds (ETFs): 1) PowerShares Senior Loan Portfolio ETF (BKLN); to earn interest rates 2) PowerShares Build America Bond Portfolio ETF (BAB);

  • Wmt Valuation Essay

    1915 Words  | 8 Pages

    concepts of the Capital Asset Pricing Model (CAPM), the expected return for Wal-Mart stock is 7.01% [E(R)]. This is a result of a risk-free rate (Rf) of 3.68%, which was the provided 10-year government bond yield to use as a proxy for the risk-free rate. The beta (β ) of Wal-Mart was 0.66 according to the provided Bloomberg beta estimate. Additional data was provided on the U.S. market risk premium [E(RM) – Rf] of 5.05%. In following the general concepts of CAPM, there are some general assumptions: