Let's stop for a moment and think about what various
valuation ratios mean.
A high loan - to -
valuation ratio means that a mortgage scheme is more vulnerable to changing market conditions, such as a downturn in the property market.
Not exact matches
Valuation ratios are increasingly subjective; they only
mean something insofar as you know how the future will unfold, he contends.
That
means that Snap stock will be insanely expensive: At a $ 24 billion
valuation, Snap shares will have a price - to - sales
ratio of 59, making it far richer than Facebook stock and other social media companies — and likely the most expensive tech IPO ever.
Finally, it doesn't matter if the low P / E
ratio is related to the company or the industry, because a low
valuation simply
means the market does not believe in sustainable profit growth.
At its current
valuation of ~ $ 67 / share, HLF has a price to economic book value
ratio (price - to - EBV) of 1.2 That
ratio means that the market expects only 20 % growth in NOPAT for the remainder of HLF's existence.
Grainger's 10 - year average P / E
ratio has been 19.0 (see the dark blue box in the right panel),
meaning that the market has tended to value it about 27 % higher than the historic
valuation of all the companies at 15.0.
It is a financial
ratio used for
valuation: a higher PE
ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with lower PE
ratio.
Firms of growth stocks all trade at high
valuation levels,
meaning they usually have high price - to - earnings (P / E)
ratios.
Cardinal's 10 - year average P / E
ratio has been 16 instead of 15,
meaning that the market has tended to value CAH a little higher than its historic
valuation of all the companies.
For instance, the blue dot on the value factor scatterplot suggests that prior to March 2016 the
valuation level of 0.14 —
meaning the value portfolio was 14 % as expensive as the growth portfolio measured by price - to - book
ratio, and lower than the historical norm of 21 % relative
valuation — would have delivered an average annualized alpha of 8.1 % over the next five years.
The Q
Ratio and Market Valuation bit.ly / tkbOnp Good article going over the Q ratio, what it means, how to calculate & forecas
Ratio and Market
Valuation bit.ly / tkbOnp Good article going over the Q
ratio, what it means, how to calculate & forecas
ratio, what it
means, how to calculate & forecast $ $
The P / E
ratio of 15 is an extremely important and rational
valuation reference if you understand the significance of what this metric really
means.
A high loan - to -
valuation ratio may
mean high investment risks for you.
Valuations like P / E
ratios are relevant to long - term returns but don't
mean much when facing extreme short - term volatility.
Using LINEST, you can calculate the effect of
MEAN REVERSION when you ignore the effect of
valuations, You take the
ratio of the relevant sum of the squares totals: sstotal = ssreg + ssresid.
Eventually this
means that the momentum component may generate bubbles and crashes in the short and medium run, nevertheless the
valuation ratio remains a good reference point of future long - run returns.
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.