To give you some sense of what average for the market is, though, many value investors would refer to 20 to 25 as the average P/E ratio range. And again, like golf, the lower the P/E ratio a company has, the better an investment the metric is saying it is.
What is considered a good or profitable Sharpe ratio?
- A sharpe ratio that is above 1.0 is considered to be good by investors. Above 2.0 is very good and above 3.0 is excellent. By now you must have gathered that a bad sharpe ratio will be below 1.0. Subtract the risk-free rate from the return of the portfolio.
What's considered a good PEG ratio?
- PEG > 1: Overvalued (bad).
- PEG = 1: Fairly valued (good).
- PEG < 1: Undervalued (very good).
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
Does a low PE ratio mean a stock is cheap?
- Generally speaking, a high PE ratio indicates that a stock is expensive, while a low PE ratio suggests that it is cheap. However, this changes completely when PE is negative. A negative PE ratio means that a stock has negative earnings. In other words, the company was losing money in the past 12 months.