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What Is The Price Earnings Ratio And The Market Rate Of Stocks?

2011/4/26 14:10:00 53

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PB Valuation Level Market Price Ratio Price Earnings Ratio Stock Knowledge

In reading research reports, investors often see words such as PE and PB.

PE is the abbreviation of P / E, which means that during an inspection period (usually 12 months),

Share price

And earnings per share.

PB is the abbreviation of the net market rate, the ratio of share price to net assets per share.

unscramble

Valuation of listed companies

We should take the PE of the same industry as a comparative object, and determine the internal reasons for the PE value of the listed company.

For example, the stock market of a listed company in the same industry may give different valuation levels. This phenomenon may imply that different enterprises can reflect the sustainability of enterprises in terms of profitability, product competitiveness, product pricing ability, corporate governance and so on.

Core competitiveness

Differences also imply market expectations and emotional differences.

Take the liquor industry as an example, at present, the valuation level of the stock of first-line liquor enterprises is lower than that of the two or three line liquor, which reflects the market's doubts about the growth of the market value of the large capitalization stock market.

The valuation of company PB is also an important selection index in the annual report, and its judgement is a comparative process.

Taking the banking industry as an example, the PB valuation of different types of banks is not the same. For example, the PB value of A bank is 3 times, B bank is 1.5 times, the difference between them is 1:2, but this difference often stems from the difference of return on net assets.

In addition, in some heavy assets enterprises, such as iron and steel, power industry, PB value is often the bottom line of their asset safety. When a company's PB value reaches 1, it shows that its current share price is equal to its net assets value, while some high growth and innovative enterprises tend to have higher PB value.

Therefore, the PB value plays a guiding role in determining the true book value of a company.