Intrinsic P/E

CFA Level II
#1

there was question on intrinsic P/E but don’t remember the exact details. can anyone recall? is the intrinsic p/e the same as warranted p/e?

#2

Or justifiable P/E? I wondered the same thing, I assumed they meant justified P/E by the way it was worded…

#3

either way what was the right way calculating it? Is it the no-growth P/E, P/E for growth or no-growth + growth. I was confused as to what they were asking.

#4

Intrinsic P/E = Tangible + PVGO 1/r + FFxG

#5

No that’s not what they were looking for. Intinsic P/E = Tangible P/E + Franchise P/E They gave you franchise P/E (I think it was 5ish) so you just had to compute tangible as 1/r which was about 5ish. So the Intrinsic P/E was like 10.8

#6

I could be way out in left field with this but I distinctly remember a question asking “what is the intrinsic VALUE” of the company, not intrinsic p/e. i did 1/r + (1/r-1/roe)x(g/r-g) and came up with an answer that was listed. but now i’m thinking i should have taken that number and multiplied it by net income of the company to get intrinsic VALUE… ? can anyone clarify?

#7

isnt Intrensic P/E the trailing P/E? (1-b)/(r-g)

#8

if I remember correctly, you could do it both ways, I think I did it to double check

#9

Yea, they specifically asked for JUSTIFIED P/E not intrinsic. So the correct answer was 1-b(1+g)/r-g

#10

may be i was day dreaming but i vividly remembered the question was about intrinsic not justified. i struggled with it for about 5 minutes and out of desperation I randomly picked one choice (may be 10.6 or 10.8…something like that).

#11

You all are talking about different Q’s.

#12

Yeah there were two questions: 1) Asked from intrinsic P/E = Tangible P/E + Franchise P/E (which was given no need to compute) 2) Justified Trailing P/E = 1-b(1+g)/r-g