is it correct to say this re: ROE and P/E?

ROE has no direct effect on P/E, if return is paid out in dividend, p/e decreases, if return is reinvested within the company, p/e increases. is this statement correct?

ROE affects PE through the payout ratio

(1-b)/(r-g)=leading P/E b=g/ROE (1-(g/ROE))/(r-g)= P/E as ROE falls so does P/E

ROE definitely affects P/E, by altering g. g = (1-b)*ROE As ROE falls, so does g. as g falls, so does P/E.

grumble Wrote: ------------------------------------------------------- > ROE definitely affects P/E, by altering g. > > g = (1-b)*ROE > > As ROE falls, so does g. as g falls, so does P/E. CORRECTION: g=(b)(ROE) Other comment holds true.

some people define b as the dividend payout ratio instead of the earnings retention ratio. grumble is smart dude I’m sure he knows it is what you keep after dividends are paid out of NI.