Why,Look,company,ratio,The,rat finance, share, loan Why Look at a companys PE ratio
Date:2021-01-09 Why,Look,company,ratio,The,rat finance
Thankfully, there are now several web sites that are there to help people like you with bad credit to find the fast personal loans that you need. When you have bad credit, the first thing that you should be looking for is a loan company that
If your financial problems have reached the point where you do not see a way out and you feel as though you are drowning in debt, your best way out is through declaring bankruptcy. Filing may well allow you to get your finances back on track
The PE ratio tells you if a stock is overpriced when it is compared to its earnings. It is suppose to be a good indicator for weather a stock is undervalued or overvalued. By why does it work?
1. You want to invest in strong earnings
Obviously the more money a company is making the better an investment the company is in the long term. No one wants to invest in a company that isnt making money. But everyone wants to invest in Coke or Google or any other large company making a ton of sales.
2. Prices act irrational
If the stock market always acted rational then there would not be any bulls markets or bears markets. Instead the markets would be flat and every time some news would come out about a company that company would adjust instantly. Because the markets dont work this way prices fly all over the place. The PE ratio gives you a way to measure when the market has overreacted.
3. Dividends and growth
One side affect of looking at a companys earnings is that a companys earnings will influence how much dividend they can afford to pay. A company with high earnings can afford to give a much higher dividend to its shareholders then a company with low earnings. Earnings can also affect the growth of a company. As a company earns money they can reinvest it in themselves to grow even faster.
4. Everyone Looks At it
PE is one of the most looked at financial ratio when deciding if a company is a good buy or not. And the benefit of this is that in the stock market when everyone looks at something it becomes much more accurate.
If 30 million people are looking at something to decide if it is a great buy or sell it is going to have a lot more influence on the price of the stock then if 3 people are looking at it.
For more on the PE ratio visit http://www.stocks-simplified.com/pe_ratio.html
For other fundamental ratios visit http://www.stocks-simplified.com/fundamental_analysis.html
Why,Look,company,ratio,The,rat
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