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PER analysis of listed companies

Author: YuanKai From: www.yourpaper.net Posted: 2009-06-16 06:53:54 Read:
Abstract: The price-earnings ratio is a measure of stock investment value of tools, even belonging to the same industry, stock price-earnings ratio is great With the passage of time changes can be seen from the changes in the level of the price-earnings ratio of listed companies over the years.
Keywords: earnings; investment
The impact of an earnings level factors

From the price-earnings ratio formula is easy to see, all the factors that can affect the share price and earnings per share will affect the level of the price-earnings ratio. Some factors that affect the price, there are factors affecting the earnings per share. Other factors both works, is that the case, the targets that have great comprehensive. Reflected the integration of all the factors, and it has great generality and simplicity, this two advantages is the price-earnings ratio of shortcomings: not precise enough in the univariate analysis, there is no advantage, therefore, we are in the price-earnings ratio analysis problem, the first thing to do is to look at the earnings level of change is caused by what factors. Without any analysis directly determine the price-earnings ratio is overvalued or undervalued, credibility is significantly impaired.
Attention to affect the price of the dominant factor is it? If the growth in the price of rising earnings rise means higher investment value. Earnings multiple string sharp rise is caused due to the deterioration of the profitability of earnings per share plunged, this high price-earnings ratio indicates that a very high level of investment risk. Obviously the same high level of earnings, there may indicate two very different results.
In general, the impact of a price-earnings ratio of the market as a whole factors there are many, but the most important two, that is, the market in which the region or the country's economic growth potential and market interest rates, the listed companies in the emerging stock markets generally have better prospects for development, profit growth is also relatively high, and therefore, the stock market's overall price-earnings ratio of emerging economies than the mature markets of the high level of earnings. Earnings targets should pay attention to the following issues: First, the indicators can not be used for the comparison of different industries, the good growth of the emerging industry of price-earnings ratio is generally higher, while the the tradition industry's price-earnings ratio is generally low, this does not explain the latter no investment value of the stock, earnings per share is very small or losses, the market price will not drop to zero, the company's price-earnings ratio will be high, high price-earnings ratio in such a case not indicate any problems. Finally, the price-earnings ratio of high and low by the market price of the impact, and the impact of changes in market prices of many factors, including speculation, so the observed long-term trends in the price-earnings ratio is very important due to the general expectations of the rate of return of 5% to 20%, it is usually considered normal The price-earnings ratio of 5-20 times.

2 Research Methods

Do price-earnings ratio study, the first thing to consider when selecting a sample of the various defects of the price-earnings ratio itself.
(1) "When the earnings per share is negative, the price-earnings ratio is not meaningful if the large loss of shares in the stock market, how to evaluate them, it was calculated that the so-called price-earnings ratio of negative, from its essential meaning, is the price-earnings ratio is static recovery period, negative earnings does not make sense, such as some high-tech companies, can not be profitable in the short term, the evaluation of these companies, the price-earnings ratio powerless we select the sample companies, earnings per share to weed out companies with negative.

(2) changes in the price-earnings ratio is non-linear, intermittent, price-earnings ratio to earnings per share as the denominator change with different quarterly earnings per share, assuming the price of the same, when the price-earnings ratio change is nonlinear . But people understand things always linear thinking, people always put things change as linear perspective, but in fact it is not linear, and sometimes share price rose more, the price-earnings ratio is lower, sometimes the price is more or price-earnings ratio is higher. Listed companies as the economic cycle, and sometimes profitable, sometimes losses, which makes earnings appear intermittently, no historical comparison Therefore, in calculating the price-earnings ratio, we select only the price-earnings ratio of a particular point in time, regardless of its follow-up during the changes in the price-earnings ratio. (3) the calculation results of the price-earnings ratio is often inconsistent. The price-earnings ratio in the calculation of the denominator of the earnings per share calculation, the impact on the price-earnings ratio is very large, was calculated using after-tax earnings per share; Some pre-tax income. In some dividends, the allotment, diluted earnings per share, and some do not dilute some earnings per share divided by tradable shares, some calculate earnings per share divided by total equity. Some in the calculation of earnings per share to non-recurring income, net of enterprises, some deduction, the use of different accounting treatment, calculated the difference between the earnings per share, which makes the price-earnings ratio to the lack of comparability. Specific calculation of the price-earnings ratio, we have adopted the authoritative website disclosure of earnings per share as a standard. Regardless of its authenticity.
PER calculation methods, large numerical difference derived by different methods, the information also different meaning PER meaning, especially in the absence of a clear and specific calculation method, it is difficult to make a correct understanding, the second is the PER based on the stock price, unless determine the earnings per share calculation, any impact on the stock price and earnings per share of factors will lead to changes in the price-earnings ratio of the stock price and earnings per share are very complicated, not difficult to give a reasonable explanation to the price-earnings ratio for specific analysis, three The price-earnings ratio multiples contain both growth factors and speculative factors, specific factors play a major role is difficult to make an accurate judgment.

The 3 PER compare

Neglect of basic environmental differences, the simple comparison of the different countries, different markets, different industries and companies, in different historical periods, earnings, price-earnings ratio of different countries, different markets, different industries and different companies transverse, and different historical period of development longitudinal comparison. First, lateral from different countries to see, many experts and scholars from China's current level of earnings compared with Western countries and determine the level of a country's price-earnings ratio, In fact, many of the theoretical research and practice show that the different national economic system, market-based higher than countries with low interest rates, investment and regulatory philosophy, economic development potential, the opportunity cost of funds, inflation differences, the average price-earnings ratio of the market will have an impact, the rapid economic development of the country's price-earnings ratio is higher than the slow development of the country; countries with high interest rates; higher the more ample funds national earnings and so on. Therefore, ignore the price-earnings ratio of basic environmental differences no scientific basis,
Second, even if it is the same country's capital market, due to the different structure of listed companies, the price-earnings ratio of comparable doubtful, under normal circumstances, the price-earnings ratio is higher than that of small-cap stocks of large-cap stocks, due to the difference of such listed company structure, resulting in The Shanghai stock market price-earnings ratio is far higher than the Hong Kong stock market, for another example, the Nasdaq market's price-earnings ratio is much higher than the New York market's price-earnings ratio, the fundamental reason is that the former listed company is a high-tech company with huge growth potential.
Third, different industries or different companies in the same industry earnings comparisons need to be cautious, in a rising cycle of sunrise industries generally have a higher price-earnings ratio; Even companies in the same industry, the price-earnings ratio will be due to the specific characteristics of the company and there are differences, the small share capital The company's price-earnings ratio is generally higher than the share capital of the company, the company's current ratio, debt ratio, earnings per share growth rate, the proportion of the outstanding shares, intangible assets ratio, firm size, controlling shareholders are significantly correlated with the price-earnings ratio exist. Comparison from different historical periods longitudinal, market-based environment to compare the same need to be careful when comparing price-earnings ratio, and can not fail any analysis is relatively simple, to consider the macroeconomic environment, the microscopic characteristics of the differences, otherwise concluded will withstand scrutiny.

4 summarizes

The price-earnings ratio is the analysis of an important indicator of the stock price high and low, is also a risk indicator, it reflects a kind of stock yield in a given period. Consolidated the two aspects of the costs and benefits of the investment earnings, can not only reflect the stock's investment income, and can display the value of the investment, so it comprehensively reflect the complete picture of the development of the stock market, stock price-earnings ratio has important value in different industries in the analysis there is still very big difference, so compare and judge the level of a stock price-earnings ratio should be and in which the industry as an important factor to consider stocks of companies in the industry life cycle will the industry have different degrees of impact, each the development of the industry to go through the start-up stage, such a life cycle of growth, stability and decline period. Various industries are now in different stages of development, and its development prospects are naturally different, and industry development status and characteristics in greatly restricting the development prospects of the companies and economic interests, and thus influence is bound to affect the company's share price in the industry
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