Why Using Average P/E Ratio is More Realistic

P/E Ratio
Knowledge Center

Forum
Philippe, Belgium

Why Using Average P/E Ratio is More Realistic

During favorable economic times (boom), company earnings are at record levels. As a result, the high stock prices and seemingly low P/E ratio's appear acceptable.
But investors are advised to use average earnings over the past 10 years or so to calculate the P/E ratio, and compare that to the historical long-term average. This gives you a more realistic insight in the Price to Earnings ratio.

 

More on P/E Ratio:
Summary
Forum
👀Why Using Average P/E Ratio is More Realistic
High PE Ratio Means What? A Good Stock?
What is the Beta of a Stock?
What is the meaning of X in PE Ratio?
Conflict of Interest of Management Buy Out
Relevance of PE Ratio for CEO
🔥When is Stock Overbought and Oversold?
Special Interest Group

Do you have a keen interest in P/E Ratio? Become our SIG Leader

P/E Ratio
Knowledge Center



About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2022 12manage - The Executive Fast Track. V15.8 - Last updated: 7-7-2022. All names of their owners.