Thing to remember about PE ratio - Deepstash

Thing to remember about PE ratio

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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Growth-rate to 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 ...

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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.

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What's a good P/E ratio to buy a stock at?

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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