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viernes, 18 de septiembre de 2015

The PER Ratio

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The PER ratio

It is one of the most commonly used ratios to analyze the stock market value of a company. It measures the number of times that the annual profit is contained in the share price.

This term comes from the price-earnings ratio, ie ratio of price on profit.

PER = Listed price/earnings per share annually.

In general terms, a higher PER is an indicator that the market expects that company profits increase in the future.

Keep in mind that this indicator should not be the only criterion to be taken into account when analyzing a company.

It is also very important, when we are comparing companies by PER, that we select companies with similar characteristics. It can lead to wrong conclusions if we compare, for example, the PER of an energy company with the PER of a telecommunications company.

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