![]() ![]() These can include things like a market correction, a recession or big changes in a company’s industry. The problem is that standard P/E ratios can be unduly influenced by near-term changes in a company’s earnings performance that have little to do with its fundamentals, and more to do with big market-moving economic events. High P/E ratios generally signify a company is overvalued whereas low ones indicate it may be a good value buy with the potential for high future returns. The P/E ratio helps you decide whether a single company is undervalued or overvalued by comparing its stock price to its earnings per share (EPS). To understand the Shiller P/E ratio you first have to understand the price-to-earnings ratio ( P/E ratio). ![]() It’s also known as the cyclically adjusted price-to-earnings ratio (CAPE) or the Shiller P/E 10, due to the 10-year data it uses. This analytical tool is most commonly used to evaluate the overall U.S. The Shiller P/E ratio helps investors understand whether stocks are overvalued or undervalued while also correcting for short-term volatility. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |