Agreed.... I just watched a tonne of vids on this PE explanation and although I'm slowly getting it, this one was by far the best - he broke it down slowly and very easy to understand plus he gave much better examples than a lot of these American vids that speak so quickly.
sagarsingh1234 - thanks and glad the video helps. I find so much rubbish is spoken about p/e ratios (just the other day two very respected newspapers got it wrong) that I had to post this video. My background as a chartered accountant with 10 years of running financial markets training courses plus 5 years in financial journalism means I am more likely to get it right than many other commentators. Hope you enjoy my other videos.
I find I follow the most on your videos when you explain it asking the questions I as an investor should ask. That's what makes it click for me. Other videos do not explain it from the side that my mindset should be thinking... Kudos to an approach that works for me!
Although this is probably 8 years too late looking at the Tesco price this morning the answer to your question is yes. You definitely want to have bought the share price at £4.20! Great videos by the way, I just about watched all of them.
bloomerstom - a low p/e can indeed indicate trouble, rather than a bargain. It all depends what the other ratios tell you alongside the p/e. For example a low p/e might reflect the market pricing the shares down knowing a firm is carrying a lot of risk (e.g. debt). Some analysts therefore prefer to use Enterprise Value (see video!) multiples rather than purely share price based.
amdismat1 - the earnings figure (either an estimated forward number or a historic one) won't change very often. However the share price changes daily, as does the reported p/e ratio. EPS is published for the previous financial year at the foot of the profit and loss account. Cheers, Tim.
Well explained video sir, Mr Romero pieto trades on my behalf due to my tight schedules and he is indeed absolutely doing great, my last investment of $5000 he gave me my ROI of $28,380 in a period of two weeks of trading isn't that amazing.
I use to think account management was another over blown hype till I started investing with Mr Romero pieto who help's me to grow my profits and increase my knowledge of investment.
Does this mean to say that a higher P/E ratio suggests greater risk and greater potential return, whereas a lower P/E suggests lower risk and lower potential return? Many thanks.
Hi I have a question, So a low p/e ratio could suggest a bargain but there could also be underlying problems that explain the low p/e ratio. Could you explain if p/e ratio = (price per share/ earnings per share), how would bad news or risk be accounted into either of these two factors, thus causing the p/e to be cheaper? have I misinterpreted this?
@@adriannemec88401400... My comment is problably going to be replaced by an even higer P/E ratio. But hey.. i invested early and i continue to invest. Still think they price will double by 2025.
@@OfficialDotaPlayer bruh currently if they double they would be worth as much as Amazon. That makes no sense to me. I know it doesn't have to make sense to me, it is what it is. The market decides what they are worth. But we all know it's in a bubble. They don't even make money through selling cars.
But, but, but... earnings per share don't equal dividends. It's possible, isn't it, that a company could have a great p to e ratio and still not issue decent dividends and that after 5 years of holding onto the shares the share price could be roughly what you paid for it? So, aren't there better indicators to look at before deciding to buy into a particular company? Please forgive my naivety - I'm pretty new to all this.
I still have the below misunderstanding: For stock#1211, the PE ratio is over 200. Now stock market price of #1211 is HKD48.2. From your video, it means that we need to wait for 200 years to get the money back. For stock#175, PE ratio is 19. Now stock market price of #175 is HKD4.02. From your video, it means that we need to wait for 19 years to get the money back. For stock#857, PE ratio is 12. Now stock market price of #857 is HKD9.55. From your video, it means that we need to wait for 12 years to get the money back. Question: 1/ From the above stock#1211, 175, 857, which one is worth to buy? From your video, high PE ratio means that it is expensive share and we should avoid buying it. Stock#1211 is the most expensive one, should we avoid buying it? Question : 2/ From your video, low PE ratio means that it is low future growth rate. Does it mean it is not worth to buy? I am confused for buying shares in PE ratio, please fix it, thanks.
It means that investors are willing to invest 200 pounds to earn 1 pound of earning & at the same time, they are expecting a dramatic increase in the earnings of the company in the upcoming years which means they will recover their money faster in the later years. Higher PE ratio shows the level of trust of the shareholders on a particular company. Consequently, a company with PE ratio of 200 is a growth company & investors are dreaming to get paid higher earnings in the future.
Which is why P/E Ratio isn't a good indicator to use alone when it comes to deciding to buy a stock. you have to use other metrics and also take a educated gamble.
What do you mean that you will wait 14 years to get your money back? You don't recieve the EPS back on your investment you get a much smaller amount back, the dividend. Can you help me out here I'm a bit lost.
Think of the company as profit machine with market valuation of 100$ and generates a profit 20$ per year... consistently. how many years of company's earnings will be needed to reach the market value. Thats P/E.
@@MrRassoudok It's a hypothetical scenario, that if you paid $4.20 for a share for example, and you were to receive 100% of earnings for that share (ie $0.30) on an annual basis, then it would take 14 years for you to finally receive back $4.20, which is equivalent to your initial investment
Adverts again that stop.this casting to.my tv. Fix it youtube. This is rubbish Yet another 1 that ends my tv cast and its still on the first dam video!
10 years later and still the best explanation
Agreed.... I just watched a tonne of vids on this PE explanation and although I'm slowly getting it, this one was by far the best - he broke it down slowly and very easy to understand plus he gave much better examples than a lot of these American vids that speak so quickly.
Agree
for real, this channel is so slept on.
Absolutely
sagarsingh1234 - thanks and glad the video helps. I find so much rubbish is spoken about p/e ratios (just the other day two very respected newspapers got it wrong) that I had to post this video. My background as a chartered accountant with 10 years of running financial markets training courses plus 5 years in financial journalism means I am more likely to get it right than many other commentators. Hope you enjoy my other videos.
The way you explain is just amazing! I always knew what P/E ratio was. But now I know in depth. Thank you very much Tim! Appreciate your help!!!
I find I follow the most on your videos when you explain it asking the questions I as an investor should ask. That's what makes it click for me. Other videos do not explain it from the side that my mindset should be thinking... Kudos to an approach that works for me!
Although this is probably 8 years too late looking at the Tesco price this morning the answer to your question is yes. You definitely want to have bought the share price at £4.20! Great videos by the way, I just about watched all of them.
Excellent! Your videos should be proclaimed as a national resource.
bloomerstom - a low p/e can indeed indicate trouble, rather than a bargain. It all depends what the other ratios tell you alongside the p/e. For example a low p/e might reflect the market pricing the shares down knowing a firm is carrying a lot of risk (e.g. debt). Some analysts therefore prefer to use Enterprise Value (see video!) multiples rather than purely share price based.
This is the best explanation of PE ratio I've seen and heard. Thanks 👍
amdismat1 - the earnings figure (either an estimated forward number or a historic one) won't change very often. However the share price changes daily, as does the reported p/e ratio. EPS is published for the previous financial year at the foot of the profit and loss account. Cheers, Tim.
Very informative videos. Thank for taking the time to visually explain these terms. It makes a huge difference when you see it on a whiteboard.
Great job! I just subscribed and look forward to watching all your videos in time.
Hi Tim, excellent tutorial, can you explain where i can find the eps on ft site please
Wow this is the best explanation for P/E
Wonderfully explained! Thank you for posting
Really clearly explained. Thanks!
Such a good video !! Learning loads !! Thank you Tim Bennett
Tim in a league of his own with explaining this jargon
Wow, This is 12 years ago. Whiteboard is timeless. Thanks 🎉
Brilliant video. Thanks Tim!!
ty for response and great bids I learnt a lot so far
hand down the best guy on these topics !
excellent video, I am doing CeMAP and this was a great explanation.
Well explained video sir, Mr Romero pieto trades on my behalf due to my tight schedules and he is indeed absolutely doing great, my last investment of $5000 he gave me my ROI of $28,380 in a period of two weeks of trading isn't that amazing.
His trade execution quality and profiting is well structured with great financial features.
Mr Romero pieto is indeed a man of great integrity who always stands by his words no matter what comes his way.
Good good content.
I use to think account management was another over blown hype till I started investing with Mr Romero pieto who help's me to grow my profits and increase my knowledge of investment.
Mariah Claire Am from peru 🇵🇪 and am also a newbie in the online Trading market so please how can I get hold of Mr pieto and his trading services?
I'm an A level business student and you explained this wayy better than the text book 😭👍
Fantastic, id love to learn more from this bloke well done fella top lesson
What is the difference between Price/Earnings and market P/E? I see both Price/Earning 10.42 and Market P/E 17.
Does this mean to say that a higher P/E ratio suggests greater risk and greater potential return, whereas a lower P/E suggests lower risk and lower potential return? Many thanks.
In the lase example. Do inverters expect a increase in dividends or share price?
Hi I have a question,
So a low p/e ratio could suggest a bargain but there could also be underlying problems that explain the low p/e ratio. Could you explain if p/e ratio = (price per share/ earnings per share), how would bad news or risk be accounted into either of these two factors, thus causing the p/e to be cheaper? have I misinterpreted this?
how do you find how much you earn per share surely it changes everyday and is this related to dividends?
thank you sir. wish my commerce teacher explained it like that
'To get your money back'-but you get your money back by selling your share! Aren't the earnings the equivalent of interest on your investment?
Very well explained and presented. Tesla is a good example of a high PE but investors believing sky rocket earnings
P/E Ratio = Understood, Thank you so much Tim
Thank you for this. I'm taking the u.s. finra exam and this was very well explained
Hello Angie, how would you like to learn how to make extra money daily, by buying and selling bitcoin
Watching this while Tesla's PE is close to 500.
"Mad ting!" ... according to Caribbean people. Lol
I was thinking exactly the same while watching it. Except now Tesla´s PE is 980 :D
@@adriannemec88401400... My comment is problably going to be replaced by an even higer P/E ratio. But hey.. i invested early and i continue to invest. Still think they price will double by 2025.
@@OfficialDotaPlayer bruh currently if they double they would be worth as much as Amazon. That makes no sense to me. I know it doesn't have to make sense to me, it is what it is. The market decides what they are worth. But we all know it's in a bubble. They don't even make money through selling cars.
It is such a relief to see something made for subjects of the United Kingdom rather than American citizens in this genre.
excellent video ,explained very nicely
Before this, I felt I was a beginner after this I am feeling I am an expert :) thank you
This is very helpful
Helped a lot, thank you
Awesome video. Thanks!
So easy to understand. Thank you!!!
Hello Paul, how would you like to learn how to make extra money daily, by buying and selling bitcoin
im not sure if I'm watching the videos to learn or watching you ahahahah
Are we supposed to use Basic or diluted EPS? And why so?
I why is the P/E ratio different when you do
price per share/earnings per share
Vs
Market Cap/Revenue
What am I missing?
SPOT ON
Is this a VHS recording?
THANK YOU
Good explanation
I clicked unlike because the sound quality was poor. Just to respect your hard work I subscribed to the magazine online.
Seconded
Thank you!
what if the EPS is negative? :)
But, but, but... earnings per share don't equal dividends. It's possible, isn't it, that a company could have a great p to e ratio and still not issue decent dividends and that after 5 years of holding onto the shares the share price could be roughly what you paid for it? So, aren't there better indicators to look at before deciding to buy into a particular company?
Please forgive my naivety - I'm pretty new to all this.
I wish I had bought and still held tesco shares for £4.20
I still have the below misunderstanding:
For stock#1211, the PE ratio is over 200. Now stock market price of #1211 is HKD48.2. From your video, it means that we need to wait for 200 years to get the money back.
For stock#175, PE ratio is 19. Now stock market price of #175 is HKD4.02. From your video, it means that we need to wait for 19 years to get the money back.
For stock#857, PE ratio is 12. Now stock market price of #857 is HKD9.55. From your video, it means that we need to wait for 12 years to get the money back.
Question: 1/
From the above stock#1211, 175, 857, which one is worth to buy?
From your video, high PE ratio means that it is expensive share and we should avoid buying it. Stock#1211 is the most expensive one, should we avoid buying it?
Question : 2/
From your video, low PE ratio means that it is low future growth rate. Does it mean it is not worth to buy?
I am confused for buying shares in PE ratio, please fix it, thanks.
It means that investors are willing to invest 200 pounds to earn 1 pound of earning & at the same time, they are expecting a dramatic increase in the earnings of the company in the upcoming years which means they will recover their money faster in the later years. Higher PE ratio shows the level of trust of the shareholders on a particular company. Consequently, a company with PE ratio of 200 is a growth company & investors are dreaming to get paid higher earnings in the future.
Which is why P/E Ratio isn't a good indicator to use alone when it comes to deciding to buy a stock. you have to use other metrics and also take a educated gamble.
What do you mean that you will wait 14 years to get your money back? You don't recieve the EPS back on your investment you get a much smaller amount back, the dividend. Can you help me out here I'm a bit lost.
yeah he got that completely wrong. extremely misleading. had to dislike for that.
Think of the company as profit machine with market valuation of 100$ and generates a profit 20$ per year... consistently. how many years of company's earnings will be needed to reach the market value. Thats P/E.
Where on earth did you get 30p? Yearly whatever I didn’t get it clearly
The company made 30p profit per share in the past year.
so 30$ per share
so you take net income and divide it by number of shares?
30p/4.2 is not 14 is it?
@@myp0h But £4.20 / 30 = .14 x 100 = 14
Great explanation. Not so great audio.
Still very helpful overall though. Thanks.
No way he predicted Boohoo
Where do you get 14 times from???? 4.2/30???? So lost on your explanation
Tesla pe is 600
And to think a share in Tesco as of 2020 is now £234....
'We don't want Rubbish'😂
I have undertand
3:30 - what do you mean by taking 14 years to make your money back?
I don't understand it either. It doesn't make much sense, all earnings don't go to the stockholder's pocket.
@@MrRassoudok It's a hypothetical scenario, that if you paid $4.20 for a share for example, and you were to receive 100% of earnings for that share (ie $0.30) on an annual basis, then it would take 14 years for you to finally receive back $4.20, which is equivalent to your initial investment
Tesla's current P/E is 1600 today.....
That'll be the expected growth then lol. I'm definitely tempted to invest even now.
Non of these rules apply to mega cap tech stocks. Nvidia is 112 !
£4.20? 👀🍁
Tesla p/e 600 😂
Adverts again that stop.this casting to.my tv. Fix it youtube. This is rubbish
Yet another 1 that ends my tv cast and its still on the first dam video!
how could ya'll hear him?
Y’all can use volume buttons.
Bad lighting and bad sound!
Sound sucks, sorry
Stopped after 1.25 the sound is terrible. Invest in a better microphone.
Invest in a better haircut.