As to nomalized earning, if need to adjust, what we should use, Av historical earning or Av ROE? THANKS in advance!
both are acceptable methods. avg EPS - is the average of the historical EPS over the last cycle. avg ROE - uses the Avg ROE over the previous cycle and EPS = Avg ROE * Currrent BVPS. The 2nd method - Avg ROE takes advantage of size changes that the company may have undergone over the previous cycle, while Avg EPS does not.
Many thanks CP!