Hi all possibly a stupid question but is a low p/E ratio better than a high value p/E ratio when looking at the financial health of a stock Ian considering for dividend investment when taken in to account next to assets Vs liabilities and
The P/E ratio indicates how much investors are willing to pay for each $/£/€ of earnings a company makes.
A low P/E ratio is normally a good thing because it represents the share being at a bargain price.
A high P/E ratio is normally a feature of companies which are expected to have big growth in the future.
So when considering a dividend investment is low P/E ratio is a good thing but you should be careful as a low P/E ratio can is also feature of a “Value Traps”
Another thing to consider is that there are P/E Ratios that are considered industry standard. so the Tech industry has a different P/E average/standard than say the beverages industry.
So it’s no good if the P/E looks low, but is actually quite high compared to the rest of its industry and you don’t want to avoid a stock with a large P/E that is actually lower than its industry peers.
Typically a High P/E is a sign the stock may be overvalued, but this may not always be the case as the next earnings report might be just around the corner and reveal that the stock is actually rather fairly valued for its updated earnings.
Holy thread revival, Batman!!!
Can anyone tell me where I can find the basic company information in the web browser version of 212? The P/E ratio, short summary, financial graphs etc. were all so easy to bring up on the phone app but I cannot find where they are in the browser version.
Awesome! Has some nice improvements. Thanks
are things like P/E ratio live data, or old? why doesn’t it ever match up to other sources, e.g. google/yahoo finance etc?
Not live, not sure how often it updates
Is it possible to get this data live in future? in the worst cases, some companies have been unprofitable for a while, yet still have a positive PE on t212
Not sure, I’m not part of Trading 212 so I can’t really tell you. But using website like seeking alpha is usually a good alternative
if you mention the names of such companies to someone on the staff you can possibly get them updated soon.
PEG ratio is a good alternative.
If a high PE doesn’t have a low PEG it could be overvalued.
PEG is less useful for established large MNCs who have a ‘premium’ attached to their security.
I agree that as many metrics as possible should be included, i.e. PE/PEG/PS/PB/ROE/ROA/ROCE
I find different sources have different P/E ratings. If it was just down to the data such as the P/E then investing would just be math that anyone can use to get rich. There is a certain artistry to investing.
I avoid anything over 20, but who’s to say that the market won’t change and that P/E goes up or down? If a company doubles in size then surely my P/E would be halved? It’s just never that clear cut, so you need to look at everything, finances, history, company objectives, market trends etc, to get an overall picture.
If the company doubles in valuation (price per share), then PE is actually doubled, assuming that EPS didn’t actually change.
What is deemed an acceptable PE range can only be compared within a relevant industry, due to different risks, growths and margins.
Yeah it’s a complicated calculation. I’m just making the point that P/E doesn’t represent the prospects of a company, which are determined by so many factors. A stock that’s highly priced with low P/E may bring returns sooner, but not as much as finding a lower priced stock with a high P/E, that has the potential to become more profitable, eventually lowering the P/E as the stock goes higher, and you walk away with a nice ROIC. Yes risk is a factor, but I think that finding the latter takes more research into a company than just finding low P/E, so the reward can be much sweeter.