Q&A 161
Read this π§΅to understand ROE, PE & relationship between them.π
PE expansion to bridge the Gap (if any) between ROE & PE.
RT if you find this helpful.
1
Read this π§΅to understand ROE, PE & relationship between them.π
PE expansion to bridge the Gap (if any) between ROE & PE.
RT if you find this helpful.
1
ROE & PE definition continued..
Keep an eye on Equations !
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Keep an eye on Equations !
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Establishing Relationship between ROE (profitability) & PE (valuation).
Replace Market Capitalization with Book value in Earnings Yield (or PE) we get ROE.
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Replace Market Capitalization with Book value in Earnings Yield (or PE) we get ROE.
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Understanding ROE & PE deeper with Dupont Analysis.
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DuPont analysis can help identify whether its Profitability, Use of Assets, or Debt thatβs driving ROE or a combination of them.
ROE = NPM * Asset Turnover * Financial Leverage.
Impact of NPM of ROE & relationship with PE.
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ROE = NPM * Asset Turnover * Financial Leverage.
Impact of NPM of ROE & relationship with PE.
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Impact of Asset Turnover & Financial Leverage (or Debt) on ROE & relationship with PE.
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Impact of ->
1) Rising or Falling ROE on PE.
2) High Dividend Payout on ROE & growth.
3) High Retention Ratio (Retained Earnings).
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1) Rising or Falling ROE on PE.
2) High Dividend Payout on ROE & growth.
3) High Retention Ratio (Retained Earnings).
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Gap between ROE & PE. PE attempt to bridge the gap.
You may find the gap ->
πWhen Market in Stress (like March to June 2020)
πIn Smaller Market Cap companies.
@Vivek_Investor
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You may find the gap ->
πWhen Market in Stress (like March to June 2020)
πIn Smaller Market Cap companies.
@Vivek_Investor
9
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