Common Practice To Evaluate P/e Ratio To Determine If A Stock Is Chea

1.	Common Practice To Evaluate P/e Ratio To Determine If A Stock Is Cheap. If You Had No Comparable Companies For A Stock, How Can You Evaluate If A Stock Is Cheap?
Answer» The inverse of the P/E is the EARNINGS yield of the company. You can compare the earnings yield to fixed income yields and/or DIVIDEND yields to GET a FEEL for how cheap the stock is. So a P/E of 50 can be interpreted as an earnings yield of 2%, while 8 can be interpreted as 12.5% earnings yield. The inverse of the P/E is the earnings yield of the company. You can compare the earnings yield to fixed income yields and/or dividend yields to get a feel for how cheap the stock is. So a P/E of 50 can be interpreted as an earnings yield of 2%, while 8 can be interpreted as 12.5% earnings yield.

Common Practice To Evaluate P/e Ratio To Determine If A Stock Is Cheap. If You Had No Comparable Companies For A Stock, How Can You Evaluate If A Stock Is Cheap?

Answer»

The inverse of the P/E is the EARNINGS yield of the company. You can compare the earnings yield to fixed income yields and/or DIVIDEND yields to GET a FEEL for how cheap the stock is. So a P/E of 50 can be interpreted as an earnings yield of 2%, while 8 can be interpreted as 12.5% earnings yield.

The inverse of the P/E is the earnings yield of the company. You can compare the earnings yield to fixed income yields and/or dividend yields to get a feel for how cheap the stock is. So a P/E of 50 can be interpreted as an earnings yield of 2%, while 8 can be interpreted as 12.5% earnings yield.

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