Share Price Data & Analysis
The price to earnings ratio indicates the expected price of a share based on its earnings. As a company’s earnings per share being to rise,
so does their market value per share.
A company with a high P/E ratio usually indicates positive future performance and investors are willing to pay more for this company’s shares.
A company with a lower ratio, on the other hand, is usually an indication of poor current and future performance. This could prove to be a poor investment.
In general a higher ratio means that investors anticipate higher performance and growth in the future. It also means that companies with losses have poor PE ratios.
Basic Exposition Example
p/e ratio:basic example
The Acorn Company stock is currently trading at $50 a share and its earnings per share for the year is 5 dollars. Acorn's P/E ratio
would be calculated like this:
Price Earnings Ratio = 50 / 5 = 10
This ratio can be calculated at the end of each quarter when quarterly financial statements are issued. It is most often calculated at the
end of each year with the annual financial statements. In either case, the fair market value equals the trading value of the stock at the end of the current period.
The earnings per share ratio is also calculated at the end of the period for each share outstanding. A trailing PE ratio occurs when
the earnings per share is based on previous period. A leading PE ratios occurs when the EPS calculation is based on future predicted numbers.
A justified PE ratio is calculated by using the dividend discount analysis.
The price to earnings ratio indicates the expected price of a share based on its earnings. As a firm's earnings per share being to rise, so does their market value per share. A firm with a high P/E ratio usually indicated positive future performance and investors are willing to pay more for this firm's shares.
A firm with a lower ratio, on the other hand, is usually an indication of poor current and future performance. This could prove to be a poor investment.
The spreadsheet below, titled ShareAnalysis2, gives a view of a number of well known companies, mainly UK, and some key investment variables.
Taking a basic tour we see company name and ticker symbol, followed by share price. Context is very important when considering a company share price
so the next few columns are devoted to previous share prices. A careful look at such data can reveal trends or events that may affect investing
decisions.
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DupontAnalysis
Dupont analysis is a financial ratio technique that is used to analyze a company’s return on equity (ROE).
The DuPont equation decomposes ROE into three components: net profit margin, asset turnover, and leverage ratio.
This analysis can provide insights into a company’s profitability and the factors that are impacting its ROE.
A DuPont analysis is used to evaluate the component parts of a firm's ROE. This allows an investor to determine what financial
activities contribute the most to the changes in ROE. An investor can use tools like this to compare the operational efficiency of two
similar firms. Managers can use DuPont analysis to identify strengths or weaknesses that should be addressed.
Share/Dupont Analysis Spreadsheet One
Dupont Analysis second Google page
Dupont exposition and further analysis to follow