Forum Archive Index - December 1999

["Rini H" <the4rs@ihug.co.nz>]

I've followed the PE ratio discussions with interest.
It is a useful indicator to value a company, negative PE means the company
suffered LOSS?

Somehow there are different opinions from sharemarket  experts:
First opinion: the lower the ratio the better, example: PE ratio = 8, means
it takes only a multiple of 8 times the share price to invest in that
company. While PE ratio = 60, means you pay for 60 times the share price,
thus more expensive to invest in that company.

Second opinion: the higher the ratio the better. The companies with high PE
Ratio have more positive outlooks (such as many US stocks have PE more than
60).

Valuation of share price depends on many other factors as well, but what's
your opinion regarding PE Ratio?
Do you go for a higher PE or a lower PE?

Rini



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