But (@But_the_Stock_Picked

1Semana·

Question about P/E ratio as a decision factor... When deciding on a share purchase, it is important to consider the P/E ratio. The opinions of both small investors and analysts differ wildly in some cases. Some say, in general terms, "I don't buy anything above a P/E ratio of 8", while others say "It's expensive for a reason".

An example of a popular stock would be $COST (+0,3 %) Costco, where the P/E ratio seems to be quite high. There are many different opinions on this.

What is your opinion on P/E ratios as a decision factor?

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Question about P/E ratio as a decision factor... When deciding on a share purchase, it is important to consider the P/E ratio. Both retail investors and analysts have wildly differing opinions on this. Some say, in general terms, "I don't buy anything above a P/E ratio of 8", while others say "It's expensive for a reason".

An example of a popular share would be Costco, where the P/E ratio seems to be quite high. There are many different opinions on this issue.

What is your opinion on P/E ratios as a decisive factor?

7 Comentarios

FairValue@FairValue

1Semana

P/E ratio is only meaningful in a time series/peer group comparison and even then only to a limited extent.

Absolute values as a purchase criterion are complete nonsense.

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Ayecaramba@Ayecaramba256

1Semana

P/E ratio stand alone is nonsense. PEG is also important in this context (price/growth). The P/E ratio is often higher for a growth company, but is justified by the growth rate.

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GAE@GAE

1Semana

The P/E ratio is only good for comparison within an industry, e.g. Nvidia vs AMD, but not NVIDIA vs Mercedes Benz.

The P/E ratio on its own says very little.

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Mostrar respuesta

Tenbagger2024@Tenbagger2024

1Semana

The P/E ratio should be viewed historically.
If, for whatever reason, earnings growth suddenly increases disproportionately, the company becomes more interesting and therefore more expensive.
What is interesting, however, is the expected P/E ratio, which may be very low due to high growth. Should this be a good buying opportunity, despite the current high P/E ratio?

For growth stocks or companies that are not yet making a profit, you should look at the P/E ratio.

Another point of reference would be the PEG, which should be around 1 or below.

There is also the Vair Value.

It is also advisable to look at the chart with the distance to the 200 and 50 day line.
Or even consult a sector chart.

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David@daviddg

1Semana

As a current shareholder of COST, I'm studing carefully the current PE and Price/FCF. The 20Y median are 27.3 and 32.1, and now we are in 55.6 and 53.6. PEG is now in 5.32, what is very high, only surpassed by companies like TSLA or LMT. I think a correction is coming next earnings between 10-20%. It is a great company, I will sell the position to make some profit, and will buy again at 770USD.

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Patrick S.@Hotte1909

1Semana

The P/E ratio can also be influenced by other circumstances, but just looking at the P/E ratio is certainly not the best method, especially when generalized. While a P/E ratio of 20 would be far too high for a bank, a P/E ratio of 20 for Nvidia or Palantir would be an almost blatant undervaluation.
Personally, I think it's the mix that makes the difference. Particularly in the same sector, I naturally also look at the P/E ratio. Especially when I don't feel like looking at the complete annual reports at the beginning. Does the share have a high or low P/E ratio for its sector? Where was the historical P/E ratio? Why is the figure higher or lower?

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