PE Ratio Explained (With Examples)

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  • เผยแพร่เมื่อ 6 มิ.ย. 2024
  • Don’t use the PE ratio until you watch this video. In this video, you will learn about the most popular valuation ratio: the Price to Earnings ratio. The PE ratio helps you to see how cheap or how expensive a company is but be careful, there's a secret about the PE ratio you need to understand.
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    TIMESTAMPS
    00:00 PE Ratio in Stock Market
    01:27 PE Ratio Simple Example
    02:25 Where the E of the PE ratio comes from
    04:30 Valuation for a Bakery Business
    07:04 CocaCola and McDonalds Compared
    07:55 Most important lesson of this video
    09:44 Earnings growth rate
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ความคิดเห็น • 77

  • @IntelligentStockInvesting
    @IntelligentStockInvesting  3 ปีที่แล้ว

    WATCH NEXT: Exactly When to Sell a Stock (3 REASONS): th-cam.com/video/hdcQu2qbF38/w-d-xo.html

  • @grizzlephotovideo
    @grizzlephotovideo ปีที่แล้ว +4

    I recently came across your videos and I love them! You explain things so well. I just wish you were still making videos!

  • @LevKarasin
    @LevKarasin 3 ปีที่แล้ว +4

    I've watched a few of your videos. What I love most is how easy it is to understand what you are saying and to be able to apply it quickly in my investing strategies. Thank you

  • @odosetumo9459
    @odosetumo9459 2 หลายเดือนก่อน +2

    Thank you so much,best video

  • @kranthi213
    @kranthi213 3 ปีที่แล้ว +2

    Awesome... Such a great example... Learnt with simple way... Thank you very much Richard..

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  3 ปีที่แล้ว +1

      My pleasure I’m glad it was informative for you:) thanks for your support - from me and my girlfriend (the awesome video editor)

  • @lalasong6852
    @lalasong6852 3 ปีที่แล้ว +2

    Clear and easy explanation to understand. Thanks!

  • @willtischler3318
    @willtischler3318 3 ปีที่แล้ว +2

    Getting to the point where I find myself looking forward to the new videos every week. Nice work again guys

  • @cncrim1
    @cncrim1 5 หลายเดือนก่อน +2

    your videos very clear love it.

  • @gyulazen
    @gyulazen 3 ปีที่แล้ว

    Well explained 👍, thank you!

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  3 ปีที่แล้ว

      Glad it was helpful! Thanks for being a subscriber and for commenting I appreciate your support Gyula :)

  • @meixo9083
    @meixo9083 2 ปีที่แล้ว +2

    keep up the good content!

  • @DaddyDebt
    @DaddyDebt 3 ปีที่แล้ว +2

    Thanks for sharing this key fundamental. I have trouble still on which value to use for earnings. It seems like their are so many values after adjustment. New subscriber here!

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  3 ปีที่แล้ว

      Glad it was helpful! Yes I hear you. Sometimes a metic like Enterprise Value / Free cash Flow can be a better choice. Buffett's "owner earnings" is also worthwhile but you'll need to calculate that for yourself because it's not on financial websites. Thanks for the support.

  • @nebula624
    @nebula624 2 หลายเดือนก่อน +2

    thanks man the example was great

  • @dominikkoksa7978
    @dominikkoksa7978 ปีที่แล้ว

    Cool, thanks 😊

  • @frank7591
    @frank7591 4 หลายเดือนก่อน +2

    It’s so good he is explaining it in sign language too

  • @catherineevel6899
    @catherineevel6899 3 ปีที่แล้ว

    Great information regarding that there is more to it the just looking at the PR ratio. And the importance for net income vs gross income. Thanks for all the great information.

  • @jbsanchez1068
    @jbsanchez1068 2 หลายเดือนก่อน

    I love that explanation, very simple..thanks

  • @florisas.7557
    @florisas.7557 3 ปีที่แล้ว

    great, thanks!

  • @a8a8528
    @a8a8528 3 หลายเดือนก่อน +1

    The best video ever on explaining PE.

  • @allyousaf2712
    @allyousaf2712 2 ปีที่แล้ว

    Great , Watching Everyday

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  2 ปีที่แล้ว +1

      Respect! Gad you’re enjoying! If you have any questions at any point I’m here for you

  • @user-ls4nh9ez6t
    @user-ls4nh9ez6t 2 หลายเดือนก่อน +2

    the best teacher i never had until now 🥸

  • @IntelligentStockInvesting
    @IntelligentStockInvesting  3 ปีที่แล้ว

    Subscribe for a new video every week :) th-cam.com/channels/8hyOJoF1gS_uGUL5uQqRhg.html

  • @mr.grantsartexplorations1014
    @mr.grantsartexplorations1014 3 หลายเดือนก่อน

    Awesome, thanks. Is the second part Forward PE?

  • @fordrivingandothers
    @fordrivingandothers 2 หลายเดือนก่อน +2

    hey there for the last part around 9:20, how did we get the ROIS of 136 and 55.50 percent?

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  2 หลายเดือนก่อน

      “ROI is calculated by subtracting the initial cost of the investment from its final value, then dividing this new number by the cost of the investment, and finally, multiplying it by 100.”
      136% = ((47.20-20)/20)x100
      55.5% = ((15.50-10)/10)x100

  • @DrJarimba
    @DrJarimba 3 ปีที่แล้ว +1

    You have a talent for explaining... Just need to find your niche so your content becomes higher value add. I'll follow you on your journey. Good luck.

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  3 ปีที่แล้ว

      Thanks Louise :) Stock investing is what I'm most passionate about and I've got a lot more to say/teach on the subject :)

  • @campfiretunes8598
    @campfiretunes8598 2 หลายเดือนก่อน +1

    This guys is really intense.. really in your face. He probably french kisses dividends. Go dude!

  • @indikajayawardana4952
    @indikajayawardana4952 3 หลายเดือนก่อน

    Thank

  • @jadegill7071
    @jadegill7071 หลายเดือนก่อน +1

    How do we calculate EPS growth rate in the future?

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  หลายเดือนก่อน +1

      We can see historical growth rates and make conservative guesses. I think it’s actually better to look at a companies historical returns on capital though. Some other videos on here I talk about return on capital.

  • @LockBingle
    @LockBingle 3 หลายเดือนก่อน

    Hi. For example, the situation is as follows: I am seeking financing to acquire a business. I approached a potential investor who asked several questions, one of which was: What is the Debt/Equity ratio of financing? Now, I'm wondering and feeling confused about what the potential investor means by asking this question. Is "Debt/Equity ratio of financing" the same as "Debt/Equity ratio," or is it something else?

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  3 หลายเดือนก่อน +1

      I think this person would be referring to the same thing, yes.

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  3 หลายเดือนก่อน +1

      Send them the financial statements they’ll need them anyways

    • @LockBingle
      @LockBingle 3 หลายเดือนก่อน

      ​@@IntelligentStockInvesting Thank you.

  • @workie123
    @workie123 3 ปีที่แล้ว

    You should make a video About growth stocks without pe😊

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  3 ปีที่แล้ว

      I could possibly do something like that :) what would you suggest I title such a video?

  • @grishi493
    @grishi493 9 หลายเดือนก่อน +1

    How did you obtain 47.20 and 2.36 or the 15.50 and 1.55? 9:39

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  9 หลายเดือนก่อน

      Company B Growing by 5%
      Year 1: $1.00 EPS
      Year 2: $1.05
      Year 3: $1.1025
      Year 4: $1.157625
      Year 5: $1.21550625
      Year 6: $1.2762815625
      Year 7: $1.340095640625
      Year 8 $1.40710042265625
      Year 9: $1.477455443789063
      Year 10: $1.551328215978516
      I rounded it down to $1.55 per share.
      IF the shares are STILL trading at 10X earnings on the market, that would translate to a share price of $15.50.
      For company A growing by 10%
      Year 1: $1.00 EPS
      Year 2: $1.10
      Year 3: $1.21
      Year 4: $1.331
      Year 5: $1.4641
      Year 6: $1.61051
      Year 7: $1.771561
      Year 8 $1.9487171
      Year 9: $2.14358881
      Year 10: $2.357947691
      I rounded it up to $2.36 per share.
      IF the shares are STILL trading at 20X earning on the market, that would translate to a share price of $47.20.
      Hope this helps.

    • @grishi493
      @grishi493 9 หลายเดือนก่อน +1

      @@IntelligentStockInvesting yes thank you so much now I understand everything, but why don't you make more videos? I saw a couple of them you are doing a great job

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  9 หลายเดือนก่อน

      @@grishi493 The time investment isn't worth it for me right now. I will make videos again someday but for now, I'm busy with other things. Still investing my own money of course.

    • @grishi493
      @grishi493 9 หลายเดือนก่อน +1

      @@IntelligentStockInvesting I understand, anyway thanks for those videos I'm learning a lot

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  9 หลายเดือนก่อน

      no problem :)

  • @Fire_soul1796
    @Fire_soul1796 2 หลายเดือนก่อน

    Is growing EPS the same as future EPS?

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  2 หลายเดือนก่อน

      Sorry I don’t understand the question

    • @Fire_soul1796
      @Fire_soul1796 2 หลายเดือนก่อน

      @@IntelligentStockInvesting I think I'm mixing up Forward P/E Ratio with growing EPS.

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  2 หลายเดือนก่อน +1

      The forward P/E ratio is a current stock's price over its "predicted" earnings per share. Not sure who’s making these predictions..
      Earnings per share growth rate you just look at what earnings per share was 3-5 years ago compared to now and determine the rate at which it has grown annualized.

    • @Fire_soul1796
      @Fire_soul1796 2 หลายเดือนก่อน

      @@IntelligentStockInvesting got it! Thanks!

  • @xavierx93
    @xavierx93 11 วันที่ผ่านมา

    the E in PE is earnings PER SHARE. Not exactly earnings. Am i wrong?

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  11 วันที่ผ่านมา +1

      Price per share / earnings per share OR market cap (which is essentially the price for the entire company) / total earnings.

    • @xavierx93
      @xavierx93 10 วันที่ผ่านมา +1

      @@IntelligentStockInvesting Ah i see. Thanks for the explanation! I am still new to investing.

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  10 วันที่ผ่านมา

      No problem

  • @DrJarimba
    @DrJarimba 3 ปีที่แล้ว +4

    Who can reliably predict earnings growth into the future beyond 1-2 years?? 2020 has given a clear answer to that.

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  3 ปีที่แล้ว +2

      That's kind of the job you're signing up for when you decide to buy business (stocks). And it's why you want to also be very conservative with your estimates so that there is a "margin of safety" AKA lots of room for you to be wrong and still wind up on top. Thanks for your comment :)

    • @hashermohammed
      @hashermohammed 2 หลายเดือนก่อน +1

      You can wait for good business shre price lower than book value. And events like 2020 gives more oppurtunity to buy good business below the book value

  • @jhondelv8891
    @jhondelv8891 7 หลายเดือนก่อน

    Why can't I save this video???

  • @DrJarimba
    @DrJarimba 3 ปีที่แล้ว +1

    Less hands movement please. Distracting.

    • @IntelligentStockInvesting
      @IntelligentStockInvesting  3 ปีที่แล้ว

      Noted. Thanks. I'm naturally pretty low energy and a slower speaker so I'm trying to find a balance of upping the energy to keep people engaged but also stay authentic. I'll find the sweet spot eventually :) thanks for your support!

  • @WaterlouATX
    @WaterlouATX 3 หลายเดือนก่อน +1

    Stop moving your damn hands so much. Geeze.