This earnings season companies have been posting fantastic outcomes, which have been driving stocks up, up, up! All figures are derived from the Average Weekly Earnings (AWE) dataset, part of the Labour Market Statistics launch. The shortcoming of this methodology is that one can’t value companies that generate unfavorable earnings. The increased the required rate of return, the less that the enterprise is valued for a similar level of future maintainable earnings. For starters, the ratio uses historic information (earlier earnings) along side dynamic present information (the price of the stock). Like so many things in life some definitely do manipulate their earnings and some are quite sincere.
The current P/E ratio is calculated by actual earnings for the earlier two quarters and the projected earnings for the the following two quarters. The P/E ratio is a useful tool for analysis, however as a result of share price can change … Read More