Sentences with phrase «earnings ratio means»

Buying stocks of a company with low price earnings ratio means that you can easily recoup your investment within a short period.

Not exact matches

So what does it mean that the price / earnings ratio is no longer 100:1?

Low payout ratios mean the company's potential to pay dividends won't suffer immediately when earnings problems arise.

Forward P / E ratios take into account expected earnings growth over the next 12 months, which means that they tend to be lower than the P / E ratio for growing companies.

For example, a 20x P / E ratio means that investors are paying 20 times the company's annual earnings.

This means the stock is discounted more than 25 percent compared with the price - earnings ratios of its peers, making it a possible value play.

So the combination of falling price / earnings ratios and falling earnings mean less in the denominator (earnings) to be multiplied into prices (earnings capitalized at the going interest rate).

They might look expensive based solely on their earnings ratios, but if their lack of profits means they're growing rapidly, they're probably still going to be a strong investment in the long run.

The earnings yield (earnings per share divided by the share price, or the inverse of the price - to - earnings ratio) still looks attractive versus real (after inflation) bond yields, meaning stocks may be cheaper than they look in a low - rate world.

... Consolidated Water has a trailing twelve - month payout ratio of 74.71 %, meaning the dividend is sufficiently covered by earnings.

A company whose stock has a low price - to - earnings (P / E) ratio means you can buy that stock relatively cheaply compared to other companies» stock.

A higher P / E ratio means that investors are currently paying more per unit of earnings, while a lower P / E means investors aren't willing to pay very much per unit of earnings.

While a 10 p / e may be attractive when interest rates are 7 % and stocks mean revert to 15 times earnings, maybe a 20 P / E ratio is cheap when interest rates are 2.5 % and stocks mean revert to 25 times earnings.

The stock's price - to - earnings ratio (P / E) is relatively high, meaning that investors think Coke will continue to increase its earnings faster than the average consumer products company.

Firms of growth stocks all trade at high valuation levels, meaning they usually have high price - to - earnings (P / E) ratios.

Over the 50 - year period, the dividend payout ratio averaged 43 %, meaning that 57 % of earnings were being invested to support future growth.

Essentially, the ratio between production and spending means that the company is showing signs of positive earnings.

A high payout ratio may mean that the company is sharing more of its earnings with its shareholders.

Assuming that this time is not different, earnings will contract as they regress to the long - term mean, and the market PE ratio will contract along with earnings.

The PE ratio has meaning, and therefore analytical value, it is an indicator of confidence of maintaining earnings, but if you make buy and sell decisions based on the PE ratio all you are doing is letting yourself be lead by the market (be it directly or inversely).

Now keep in mind that Hormel's current payout ratios are in its sweet spot, meaning they provide the optimal mix of dividend growth, security, and retained earnings and free cash flow with which to reinvest in the business.

A higher P / E ratio means that investors expect higher earnings growth in the future.

Because earnings measured over shorter horizons such as one year are extremely volatile and mean reverting, the ratio of prices to current earnings does not predict future long - term returns.

That does not mean that all stocks with low price - earnings ratios have little or no growth prospects.

75 % payout ratio means that the earnings can drop by a quarter and the company is still able to keep the dividend at the same level than last year.

Possibly we may mean that it is selling at an even higher ratio than are other comparable stocks with similar prospects of materially increasing their future earnings.

Remember, a low Price to Earnings ratio does not always mean guaranteed success.

While stocks look like bargains in terms of all the standard ratios â $» price - to - earnings, price - to - sales, price - to - book â $» that doesnâ $ ™ t mean that you can buy something Monday and expect to make a profit by Friday.

Shiller's research showed that CAPE ratios do not predict future growth rates; he found that some of the strongest mean reversion in the capital markets is between past and future earnings growth rates.

A company that pays out all of its earnings would have a payout ratio of 100 percent, while a higher payout ratio means that the company is paying out more than it is actually earning.

The average payout ratio for the group is 57 %, meaning just over half of the companies earnings are used to pay dividends, this is a reasonable level.

If the income stream is stable, supported by steady earnings and a reasonable payout ratio, a lower price means lower risk.

While different industries have different appropriate payout ratios, typically payout ratios higher than 70 % indicate a dividend cut may be on its way, while below 70 % means the dividend is likely sustainable and there are additional earnings to support further dividend increases.

If a company has a high dividend payout ratio, it means that it pays greater percentage of its earnings to its shareholders.

Raj Yerasi, a money manager based in New York, has taken on the unenviable task in the following guest post of arguing the case that the increasing influence of foreign earnings on corporate profit margins means that the ratio in the chart overstates future mean reversion in earnings:

As of July 1, 2011, the Cyclically Adjusted PE (CAPE) ratio for the S&P 500 is 23.13, which essentially means the average share of common stock in the S&P 500 companies trades for 23.13 times its annual earnings averaged over... Continue reading →

While a 10 p / e may be attractive when interest rates are 7 % and stocks mean revert to 15 times earnings, maybe a 20 P / E ratio is cheap when interest rates are 2.5 % and stocks mean revert to 25 times earnings.

The stock of a company that is classified as a «value stock» typically has a lower price - to - earnings ratio, which simply means that the stock currently has a lower price per share relative to the company's earnings per share.

A low dividend payout ratio means that a company is returning a small portion of its earnings to investors, while a high payout ratio implies that a company uses the majority of its profit for dividends instead of for future growth.

Many investors try to buy stocks that are selling for very low P / E ratios, meaning that the stock is selling for a low price relative to the previous year's earnings.

The PE ratio, or cap rate, at which a common stock sells in an OPMI market, has no particular meaning for a company in - creasing its equity base through retaining earnings.

The earnings yield (earnings per share divided by the share price, or the inverse of the price - to - earnings ratio) still looks attractive versus real (after inflation) bond yields, meaning stocks may be cheaper than they look in a low - rate world.

For example, if EBIT was $ 500,000 and net interest expenses were $ 100,000, the interest coverage ratio would be 5, which means that earnings are five times larger than interest expenses.

With the stock currently trading at ~ $ 169, shares are slightly overvalued, which means the stock might not see further expansion of the price - to - earnings ratio.

A high P / E ratio means that investors believe the future earnings of a company are expected to be strong.

The P / E ratio, price - to - earnings, is a means of understanding growth expectations.

Historically it has been mean reversion of valuation ratios like price to book and price to earnings which have had the greatest effect on long term equity returns.

And yet the current share price means that the dividend yield is higher, and the long - term price to earnings ratio is lower, than most other mid and large - cap companies.

A consistently high payout ratio may mean the company doesn't have favorable places to invest its money for future growth of earnings and dividends.