If you were wondering “Is a high PE ratio good?”, the short answer is “no”. The higher the P/E ratio, the more you are paying for each dollar of earnings. This makes a high PE ratio bad for investors, strictly from a price to earnings perspective.
What does a high PE ratio tell you?
- The basic concept. The p/e's simplicity is also a pitfall. ...
- Variations on the theme. Other drawbacks are that the classic p/e uses last year's earnings figure,and it also only looks at one year,a problem when earnings are volatile ...
- There's no 'magic number' If you could get rich using one number,we'd all be doing it. ...
- A useful alternative: EV/Ebitda
Do you want a high or low P E ratio?
- There is no concrete answer regarding whether a higher or lower PE ratio is more desirable; rather potential positives and negatives exist in either case. Once an investor identifies a relatively high or low PE ratio, it is important for that investor to do further research to determine the cause.
Is a high forward PE good?
- Understanding PE gives the investors an idea if the stock has sufficient growth potential. Stocks with low PE can be considered good bargains as their growth potential is still unknown to the market. If the PE is high, it warns of an over-priced stock. It means the stock's price is much higher than its actual growth potential.
Is a high put call ratio good?
- A very high Put/Call Ratio is therefore potentially short-term bullish for stocks/stock indexes. An extremely low number of puts (high number of calls) indicates that traders may be too bullish, and if all the “bulls” have already taken positions then there is no one left to push prices higher.
A high P/E ratio can be a good indicator of a company with good growth prospects. However, it is not enough to look at the P/E ratio alone. Ensure that you analyze the financials and fundamentals of the company and its competition to determine its growth prospects. This can help you make a more informed decision.