Agreed.... I just watched a tonne of vids on this PE explanation and although I'm slowly getting it, this one was by far the best - he broke it down slowly and very easy to understand plus he gave much better examples than a lot of these American vids that speak so quickly.
Well explained video sir, Mr Romero pieto trades on my behalf due to my tight schedules and he is indeed absolutely doing great, my last investment of $5000 he gave me my ROI of $28,380 in a period of two weeks of trading isn't that amazing.
I use to think account management was another over blown hype till I started investing with Mr Romero pieto who help's me to grow my profits and increase my knowledge of investment.
sagarsingh1234 - thanks and glad the video helps. I find so much rubbish is spoken about p/e ratios (just the other day two very respected newspapers got it wrong) that I had to post this video. My background as a chartered accountant with 10 years of running financial markets training courses plus 5 years in financial journalism means I am more likely to get it right than many other commentators. Hope you enjoy my other videos.
Although this is probably 8 years too late looking at the Tesco price this morning the answer to your question is yes. You definitely want to have bought the share price at £4.20! Great videos by the way, I just about watched all of them.
@@MrRassoudok It's a hypothetical scenario, that if you paid $4.20 for a share for example, and you were to receive 100% of earnings for that share (ie $0.30) on an annual basis, then it would take 14 years for you to finally receive back $4.20, which is equivalent to your initial investment
@@adriannemec88401400... My comment is problably going to be replaced by an even higer P/E ratio. But hey.. i invested early and i continue to invest. Still think they price will double by 2025.
@@OfficialDotaPlayer bruh currently if they double they would be worth as much as Amazon. That makes no sense to me. I know it doesn't have to make sense to me, it is what it is. The market decides what they are worth. But we all know it's in a bubble. They don't even make money through selling cars.
bloomerstom - a low p/e can indeed indicate trouble, rather than a bargain. It all depends what the other ratios tell you alongside the p/e. For example a low p/e might reflect the market pricing the shares down knowing a firm is carrying a lot of risk (e.g. debt). Some analysts therefore prefer to use Enterprise Value (see video!) multiples rather than purely share price based.
What do you mean that you will wait 14 years to get your money back? You don't recieve the EPS back on your investment you get a much smaller amount back, the dividend. Can you help me out here I'm a bit lost.
Think of the company as profit machine with market valuation of 100$ and generates a profit 20$ per year... consistently. how many years of company's earnings will be needed to reach the market value. Thats P/E.
amdismat1 - the earnings figure (either an estimated forward number or a historic one) won't change very often. However the share price changes daily, as does the reported p/e ratio. EPS is published for the previous financial year at the foot of the profit and loss account. Cheers, Tim.
I find I follow the most on your videos when you explain it asking the questions I as an investor should ask. That's what makes it click for me. Other videos do not explain it from the side that my mindset should be thinking... Kudos to an approach that works for me!
But, but, but... earnings per share don't equal dividends. It's possible, isn't it, that a company could have a great p to e ratio and still not issue decent dividends and that after 5 years of holding onto the shares the share price could be roughly what you paid for it? So, aren't there better indicators to look at before deciding to buy into a particular company? Please forgive my naivety - I'm pretty new to all this.
I still have the below misunderstanding: For stock#1211, the PE ratio is over 200. Now stock market price of #1211 is HKD48.2. From your video, it means that we need to wait for 200 years to get the money back. For stock#175, PE ratio is 19. Now stock market price of #175 is HKD4.02. From your video, it means that we need to wait for 19 years to get the money back. For stock#857, PE ratio is 12. Now stock market price of #857 is HKD9.55. From your video, it means that we need to wait for 12 years to get the money back. Question: 1/ From the above stock#1211, 175, 857, which one is worth to buy? From your video, high PE ratio means that it is expensive share and we should avoid buying it. Stock#1211 is the most expensive one, should we avoid buying it? Question : 2/ From your video, low PE ratio means that it is low future growth rate. Does it mean it is not worth to buy? I am confused for buying shares in PE ratio, please fix it, thanks.
It means that investors are willing to invest 200 pounds to earn 1 pound of earning & at the same time, they are expecting a dramatic increase in the earnings of the company in the upcoming years which means they will recover their money faster in the later years. Higher PE ratio shows the level of trust of the shareholders on a particular company. Consequently, a company with PE ratio of 200 is a growth company & investors are dreaming to get paid higher earnings in the future.
Which is why P/E Ratio isn't a good indicator to use alone when it comes to deciding to buy a stock. you have to use other metrics and also take a educated gamble.
Does this mean to say that a higher P/E ratio suggests greater risk and greater potential return, whereas a lower P/E suggests lower risk and lower potential return? Many thanks.
Adverts again that stop.this casting to.my tv. Fix it youtube. This is rubbish Yet another 1 that ends my tv cast and its still on the first dam video!
Hi I have a question, So a low p/e ratio could suggest a bargain but there could also be underlying problems that explain the low p/e ratio. Could you explain if p/e ratio = (price per share/ earnings per share), how would bad news or risk be accounted into either of these two factors, thus causing the p/e to be cheaper? have I misinterpreted this?
