In general, a p/e ratio that’s half the growth rate is very positive, and one that’s twice the growth rate is very negative.
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Similar ideas to Thing to remember about PE ratio
A slightly more complicated formula enables us to compare growth rates to earnings, while also taking the dividends into account.
Find the long-term growth rate (say, Company X’s is 12 percent), add the dividend yield (Company X pays 3 percent), and divide by the p/e ratio (Company X’s is ...
THE PRICE/EARNINGS RATIO
We’ve gone on about this already, but here’s a useful refinement: The p/e ratio of any company that’s fairly priced will equal its growth rate.
I’m talking about growth rate of earnings here. How do you find that out? Ask your broker what’s the growth rate, a...
Unfortunately, there's no P/E ratio set in stone that makes a stock a buy if it's below, or a sell if it's above.
Often value investors and growth investors will look for different things in a P/E ratio.
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