--%>
Assignment Help - homework help

Describe the P-E valuation method

Describe the P/E valuation method. Under what conditions a stock should be valued by using this method?
The P/E ratio denotes how much investors are keen to pay for each dollar of a stock's earnings. A high P/E ratio denotes that investors believe the stock's earnings will rise, or that the risk of the stock is low, or both.
Financial analysts frequently use a P/E model to estimate common stock value for businesses which are not public. Firstly, analysts compare the P/E ratios of similar companies within an industry to determine an appropriate P/E ratio for companies in that industry. Secondly, analysts calculate correct stock price for firms within the industry by multiplying each of firm's earnings per share (EPS) by the industry average P/E ratio.

   Related Questions in Finance Basics

  • Q : State Schedule 11 Schedule 11 : It is

    Schedule 11: It is the outdated word for “Supplementary Schedule of Operating Expenses and Equipment.”

    		•
  • Q : Define Grants Grants : It is generally

    Grants: It is generally used to explain amounts of money received by an organization for a particular purpose however with no obligation to repay (that is, in contrast to a loan, though the award might stipulate the repayment of funds under some situa

    		•
  • Q : Why do financial managers compute the

    Why do financial managers compute the marginal tax rate?Financial managers utilize marginal tax rates to estimate the future after tax cash flows from investments.  Because they are interested in how much of the next dollar earned through n

    		•
  • Q : State Section 8.50 Section 8.50 : The

    Section 8.50: The Control Section of Budget Act gives the authority to raise federal funds expenses authority.

    		•
  • Q : Free-rider problem Normal 0 false false

    Normal 0 false false

    		•
  • Q : Financial strategy describe the sales

    describe the sales forecasting process ?

    		•
  • Q : What is State Operations State

    State Operations (SO): It is a character of expenditure symbolizing expenditures for the support of state government, exclusive of capital investments and expenses for the local assistance actions.

    		•
  • Q : Influence of mergers on fees assessed

    What influence have mergers had on fees assessed for retail bank services? The effect is not clear. Market conditions and the level of competition often determine the cost for retail bank services.

    		•
  • Q : What is the efficiency factor Normal 0

    Normal 0 false false

  • Q : Define Trigger Trigger : An event which

    Trigger: An event which causes an action or actions. The triggers can be active (like pressing the update key to validate input to a database) or passive (like a tickler file to repeat of an activity). For illustration, budget "trigger" mechanisms hav

    		•