PE ratios *help*

What does a PE excluding extraordinary items show…because I’ve looked at some stocks and they always have a high PE excluding extraordinary items. So they aren’t so extraordinary. Please can someone give me some insight and whether this overrides a standard PE?

I know it’s something to do with convertible securities but are these normal? Is this something you need to consider when reviewing a company?

@cavanhagan
@TsotFin
@Vedran
@SvenHR
@Eden

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In simple terms it’s just tells you how the PE ratio is calculated. A company may receive or pay a huge sum of money, but management can decide whether to to use the value for declaration on current accounting and declare it as an extraordinary item meaning it’s a one off event . That’s why it is tricky to judge the value of a company using this metric alone. It simply boils down to what figures are used and this can easily be manipulated using creative accounting methods.

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