Watch PE when valuing a company

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(17-02-2014, 09:55 PM)arriyana Wrote: I personally love PE ratio simply because it has a basic rationale behind it. A 10x ratio means you take 10 years to earn back your capital assuming earnings stay constant for the next 10 years. The problem with PE ratio is people get obsessed with it. In a cyclical industry, it is only rationale for you to moderate it to reflect its true value. Blaming an indicator for being inaccurate is like blaming the pen for poor handwriting.

PE ratio is a tool. We might blame it inaccurate because the "PE" is directly from the AR.

I always prefer adjusted PE, from the reported PE. I will adjust it to exclude one-time items, fair values etc, and focus on recurring items. That make the adjusted PE more meaningful, and useful during the DD of a counter.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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Messages In This Thread
The P/E ratio is twaddle - by FFNow - 29-09-2012, 09:05 PM
RE: Watch PE when valuing a company - by arriyana - 17-02-2014, 09:55 PM
RE: Watch PE when valuing a company - by CityFarmer - 18-02-2014, 09:48 AM
RE: Watch PE when valuing a company - by freedom - 18-02-2014, 10:45 AM
RE: Watch PE when valuing a company - by wee - 20-02-2014, 01:31 PM
RE: Watch PE when valuing a company - by wee - 25-02-2014, 06:33 PM
RE: The P/E ratio is twaddle - by Some-one - 29-09-2012, 10:27 PM
RE: The P/E ratio is twaddle - by FFNow - 30-09-2012, 12:14 AM
RE: The P/E ratio is twaddle - by Temperament - 30-09-2012, 09:11 AM
RE: The P/E ratio is twaddle - by freedom - 30-09-2012, 09:43 AM
RE: The P/E ratio is twaddle - by shanrui_91 - 30-09-2012, 12:31 PM
RE: The P/E ratio is twaddle - by CityFarmer - 30-09-2012, 10:01 PM
Watch PE when valuing a company - by Musicwhiz - 16-12-2012, 09:14 AM
RE: Watch PE when valuing a company - by freedom - 16-12-2012, 10:11 AM
RE: Watch PE when valuing a company - by yeokiwi - 16-12-2012, 10:29 AM
RE: Watch PE when valuing a company - by hongonn - 16-12-2012, 03:44 PM
RE: Watch PE when valuing a company - by hongonn - 16-12-2012, 06:59 PM
Article targeting novice - by ValueBeliever - 16-12-2012, 04:21 PM
RE: Watch PE when valuing a company - by FFNow - 16-12-2012, 05:00 PM
RE: Watch PE when valuing a company - by VIChris - 16-12-2012, 06:00 PM
RE: Watch PE when valuing a company - by FFNow - 16-12-2012, 07:13 PM
RE: Watch PE when valuing a company - by VIChris - 17-12-2012, 01:16 AM
RE: Watch PE when valuing a company - by Nick - 16-12-2012, 07:39 PM
RE: Watch PE when valuing a company - by freedom - 16-12-2012, 08:18 PM
RE: Watch PE when valuing a company - by Bibi - 16-12-2012, 11:07 PM
RE: Watch PE when valuing a company - by hongonn - 17-12-2012, 01:07 AM
RE: Watch PE when valuing a company - by Stocker - 17-12-2012, 08:58 AM
RE: Watch PE when valuing a company - by FFNow - 17-12-2012, 11:01 AM
RE: Watch PE when valuing a company - by Stocker - 17-12-2012, 11:04 AM
RE: Watch PE when valuing a company - by yawnyawn - 17-02-2014, 08:04 PM
RE: The P/E ratio is twaddle - by ashparagon - 14-02-2014, 10:57 PM
RE: The P/E ratio is twaddle - by orangetea - 14-02-2014, 11:41 PM
RE: The P/E ratio is twaddle - by Clement - 15-02-2014, 12:11 AM
RE: The P/E ratio is twaddle - by ashparagon - 17-02-2014, 05:00 PM

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