No I don't neccessarily think so. A low PE ratio could signify that the market believes that the company will perform worse off financially, and hence is willing to pay less for each dollar of earnings of the company. Conversely, a high PE ratio does not neccesarily mean that a company is overvalued.
I would think that it is more important to understand why the PE is high or low. If there are actual justifiable reasons for these forms of valuation, then the company may not be over or undervalued at all.But I would suppose that very low or high multiples could be an indicator to dig deeper and find out why they are valued this way.
Looking at PE to EPS growth can also help to understand if the growth rate justifies the PE valuation. Comparing the PE to other comparable companies can also help to see if this share has been valued properly. More importantly, digger into the financial statements and performing some analysis on it would also be quite needed.
No I don't neccessarily think so. A low PE ratio could signify that the market believes that the company will perform worse off financially, and hence is willing to pay less for each dollar of earnings of the company. Conversely, a high PE ratio does not neccesarily mean that a company is overvalued.
I would think that it is more important to understand why the PE is high or low. If there are actual justifiable reasons for these forms of valuation, then the company may not be over or undervalued at all.But I would suppose that very low or high multiples could be an indicator to dig deeper and find out why they are valued this way.
Looking at PE to EPS growth can also help to understand if the growth rate justifies the PE valuation. Comparing the PE to other comparable companies can also help to see if this share has been valued properly. More importantly, digger into the financial statements and performing some analysis on it would also be quite needed.