Justified leading P/E = (1-b)/(r-g)
Justified trailing P/E = (1+g)(1-b)/(r-g)
I’m not understanding this intuitively, if a company is growing why would last period’s P/E ratio be higher than next period’s P/E ratio?
Justified leading P/E = (1-b)/(r-g)
Justified trailing P/E = (1+g)(1-b)/(r-g)
I’m not understanding this intuitively, if a company is growing why would last period’s P/E ratio be higher than next period’s P/E ratio?
growing earnings = lower P/E
ahh, that was an easy one
Price is constant at t0 you then calculate pe using the trailing earnings or your projected earnings for the firm.