Price Earning Ratio

[sunilpandya]

I have seen different P/E Ration figure in different news paper and BSE +NSE website. I am confused.

Can anybody show actual example for example for Reliance Industries Limited or Tata steel?

That is some expert actually calculate P/E ratio and show me?

Sunil pandya

 

[anoopvs]

generally it is this :
today's price/ TTM EPS till date.
In that terms, EPS calculation is complex since it involves

(ni-preferred dividends)/no. of outstanding stock. it gets more complex when there are warrants, options and other dilute able securities.
read http://www.investopedia.com/study-guide/cfa-exam/level-1/financial-ratios/cfa13.asp

experts correct me if am wrong

 

[nishantvarma]

PE Ratio of a company is a basic tool to check the quality of a stock .
Its formula is market price / earnings per share .
nof shares / total profit = earnings per share .

Say a PE of 2 , it means ideally the company would earn the money invested in 2 years and the rest is profit . PE of 5 would mean , you would earn the money in 5 years and PE of 20 means you earn in 20 years and so on . Some fast growing companies demand higher PE because of the growth expectation in the stock .
Generally the lower the PE , the cheaper the stock is provided the company is expected to keep making profits at the same or better levels .
Hope you understand .

 

[rvm123]

Mr Sunilpandya, you may give the figures mentioned in the different sites, so that how the p/e ratio is arrived at can be calculated and explained