Browsing All posts tagged under »P/E Ratio«

Leading Fund Managers Comment on the UK Equity Market

February 17, 2011


Bloombery today published an article which contains a number of interviews with leading UK fund managers.  It is quite clear that there are some differing views on the market, particularly with regard to companies focused upon the UK consumer. Paul Spencer, manager of Rensburg Fund Management Ltd.’s U.K. Mid- Cap Growth fund: “Many U.K. stocks […]

Shaftesbury plc: Great assets, but over-valued?

January 25, 2011


Shaftesbury plc (SHB) is a real estate investment trust which owns freeholds on more than 500 buildings of prime London property, including much of Chinatown, the Carnaby Street and Seven Dials shopping “villages”, property in the Covent Garden Opera Quarter, St Martin’s Courtyard and on Berwick Street in Soho. These areas form key sections of […]

Common Errors In Company Valuation

January 20, 2011


The following is a list of common corporate valuation and investment errors identified by Pablo Fernandez (University of Navarra – IESE Business School) in a paper entitled “80 Common Errors in Company Valuation“. 1. Errors in the discount rate calculation and concerning the riskiness of the company A. Wrong risk -free rate used for the […]

Why The Equity Market Still Looks Good Value

December 20, 2010


An regularly quoted measure in order to estimate whether or not the equity market represents good value is the price/earnings ratio (ie. the price of the overall stock market relative to the current year’s forecast earnings).  This makes sense given that shareholders are paying for the stream of earnings that the companies in the index […]

The Failings of the P/E Ratio

August 31, 2010


Arguably the simplest of all the equity valuation methodologies, the P/E ratio is also a metric with a large number of shortcomings. In the basic sense, the P/E ratio is attractive to investors because it is easy to apply (no detailed cash flow forecasts or estimates of the cost of capital are required) and is […]