If I remember correctly growth firms have low P/E ratios? If we did a stock screen for low P/E ratos we would most likely end up excluding too many growth firms from the sample because high expected earnings growth leads to high P/Es? Any thoughts?
pretty sure they have high p/e ratios and value stocks have low p/e ratios.
growth stocks have high p/e ratios because they have expectations of high growth rates which translate to higher relative prices
You are correct. High P/E are growth stocks and Low P/E are value stocks. Thanks.