On the first working day of this week, the GEM and the concept of "Beautiful 50" staged a market of ice and fire, and the seventh season of "Fire and Ice" was released as scheduled. With the repeated switching of the market, the blue-chip valuation of the market is in place, and the argument that the value of small and medium-sized stocks is gradually returning is coming again. So what is the valuation return?
Today, Daejeon will tell you about the most important indicator in valuation, the price-earnings ratio.
Definition and connotation
Price-earnings ratio (P/E ratio) is the most commonly used valuation index for investors in the secondary market.
The calculation formula of P/E ratio is: share price/earnings per share of common stock, or total market value/net profit attributable to shareholders of parent company.
P/E ratio measures the relationship between investors' cost (share price) and return (earnings per share). We can even intuitively understand the P/E ratio as "it will take investors several years to recover their investment".
P/E ratio applies to single stock, stock portfolio, index and even market.
And classification calculation method.
There are many classifications of P/E ratio, static P/E ratio (based on past earnings) and dynamic P/E ratio (based on future earnings), but in fact, Daejeon really doesn't know who named this "dynamic" and "static", which is really easy to misunderstand. It is better to call it historical P/E ratio and expected P/E ratio. So we like to recommend a classification that can clearly reflect its calculation method:
LYR (last year) = share price/earnings per share of common stock in the previous year (fiscal year instead of natural year).
TTM (past 12 months) = sum of stock price/earnings per share announced by common stock in the past 12 months (four quarters or two and a half years).
Forecast P/E ratio = stock price/forecast earnings per share of common stock in the current year.
There are also many calculation methods for calculating the forecast P/E ratio of "the forecast earnings per share of ordinary shares in the current year":
Simple and rude methods, such as quarterly earnings per share *4, semi-annual earnings per share /2*4, or quarterly earnings per share /3*4 according to published periodic reports.
Consider the methods that the company may have off-season and peak season, such as quarterly earnings per share/quarterly earnings per share last year * annual earnings per share last year.
The method of market knowledge, such as taking the average of earnings per share predicted by several authoritative analysts in that year.
At present, LYR's P/E ratio data is too old, and the predicted P/E ratio is prone to deviation, while TTM's P/E ratio is the most widely used. At s&; Ampp dividend index, China small and medium-sized stock index of Hong Kong stocks, American optional consumption index and "historical price-earnings ratio" are all TTM ~
Use skills
First of all, the price-earnings ratio is not suitable for listed companies to evaluate meager profits or losses. For example, the price-earnings ratio of Huabao Oil. Gas correspondence index. American oil company. The upstream index of natural gas is negative.
Secondly, it is not suitable to compare the P/E ratios of different industries and countries. For example, TMT industry and banks, as well as the constituent stocks in Hong Kong's big market, there are also different PE levels behind the price difference between A and H. If we want to compare, the price-earnings ratio of the same industry is of reference value; For the index or the market, the historical average P/E ratio has reference value.
Most importantly, don't use the P/E ratio in isolation. Generally speaking, the low P/E ratio of a stock indicates that the investment risk of this stock is small, but it may also be that the fundamentals of this stock are poor and the market thinks that it is not worth a high P/E ratio. A stock enjoys a high P/E ratio, which usually indicates that investors generally believe that the company's future profits will increase rapidly, so that the P/E ratio will drop to a reasonable level within a few years. At this time, it is necessary to carefully analyze whether its high growth is meaningful. It is a more scientific method to combine P/E ratio with fundamental analysis.
Finally, there is a hidden skill in the price-earnings ratio. The reciprocal of the price-earnings ratio (E/P) is the rate of return on investment, which can be used to compare the investment value between large categories of assets. Take the American stock market as an example. After more than eight years of bull market, the valuation of US stocks has reached the second highest level in history, second only to the Internet bubble in 2000. But compare the previous two highs of US stocks (65438+2007 10 before the financial crisis bubble and the top of Internet bu).
(Original reprinted from: Huabao Tianyi)
Dongfang fortune net gub
Related Q&A: What does negative P/E ratio mean? 1, negative P/E ratio means negative earnings per share, indicating that the company's poor management leads to annual income loss. If you lose money for two consecutive years, you will be st, and if you continue to lose money, you will be delisted. 2. P/E ratio classification Static P/E ratio: Divide the price per share of common stock by the recently announced earnings per share of common stock. Dynamic price-earnings ratio: the market price of common stock divided by the expected annual earnings per share.