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P/E is how many times the current investor wants to pay the current earnings, but the current investor is valuing the future earnings of the company when they calculate what company is worth (so I may hope). So if something changed for a company and future earnings will be higher than current earnings, P/E will be higher, but does not necessarily mean it is overvalued. Always do your own analysis of what a company is woth according to you, with your estimates of the numbers, looking only at P/E is where I look when I'm lazy (or when I think nothing has changed in company, and then still I only buy after my own cakculations as it is only the current multiple of the market and they tend to be way of 😅)
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@JorisInvests For me it is just a multiple and absolutely not a metric that I use for evaluation purposes. In general, a high P/E means that a stock could, and I repeat could potentially be overvalued. Then with the necessary analysis it is estimated whether it is actually undervalued or overvalued, but it must be said that if the average P/E of the sector is at 30 and the stock has a multiple of 60 it is not exactly prudent to buy at those prices. Only a fool would buy that title.
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