Generally speaking, a company's high P/E ratio indicates that investors have optimistic expectations for the company's future profit growth, but whether the reality meets the expectations will bring uncertainty. Assuming that the profit level of listed companies remains unchanged, the P/E ratio is the period for stock investment to recover the principal. The lower the P/E ratio of a company, the greater the safety margin of its stock investment, that is, pessimistic expectations have been reflected in the stock price.
Judging from the calculation method of price-earnings ratio, the price-earnings ratio of individual stocks = share price/earnings per share, which is usually calculated by the ratio of the market value of listed companies' stocks to their corresponding net profits attributable to shareholders of the parent company. Index P/E ratio = market value of constituent stocks/net profit attributable to constituent stocks.
However, it should be noted that when determining the denominator of the P/E ratio calculation formula, that is, net profit, sometimes there are big differences, that is, choosing the net profit of the listed company in the fiscal year, the net profit of the last 12 month, and the estimated net profit of the current year or the following year.
In addition, when calculating the index price-earnings ratio, there are still differences in the selection of sample range, the updating method of net profit, and the weighting method.
In view of the above differences, the China Securities Regulatory Commission issued the Standard Guidelines for Statistical Indicators of Securities and Futures Industry on 20 1317 October, in which the P/E ratio used by the CSRC system was defined and explained in detail.
P/E ratio refers to the ratio of listed company's share price to earnings per share, which is usually calculated by the ratio of listed company's stock market value to its corresponding net profit attributable to shareholders of parent company. According to the different earnings per share, P/E ratio can be divided into static P/E ratio (net profit in fiscal year), rolling P/E ratio (net profit in recent 12 months) and forecast P/E ratio (net profit in the current year), and it is clearly stipulated that when calculating the index P/E ratio, the relevant data of net profit will be updated the day after the deadline of financial report announcement, including stocks with negative net profit, but excluding stocks whose listing is suspended.
At the end of April, the rolling P/E ratios of all A-shares in Shanghai and Shenzhen stock markets were 13.58 times, while the rolling P/E ratios of the FTSE composite index in Britain, the CAC All stock index in France and the DAX composite index in Germany were 17.58 times, 23. 12 times and 14.72 times respectively.
Judging from the blue-chip index in the market, the rolling P/E ratio of the Shanghai and Shenzhen 300 Index products was 10.86 times at the end of April, which was close to the rolling P/E ratios of the Dow Jones Industrial Average, Nikkei 225 Index and FTSE 100 Index in the same period.
In view of the low P/E ratio of domestic bank stocks, the weight is generally greater than other markets. If bank stocks are excluded, the rolling P/E ratio of domestic stock market is about 22 times.
(Contributed by: CSI Capital Market Operation Statistics Monitoring Center)