PE RATIO EXPLAINED - HOW TO USE PRICE EARNINGS RATIO FOR STOCK MARKET DECISIONS

Graham devotes a complete chapter on how to use the Price to earnings ratio or PE ratio to make stock market decisions.
We explain what a PE ratio is, how to calculate it and how to use it.
We go through Graham's examples but also give modern examples of what to watch for when investing.

Sven Carlin Research Platform:

Modern Value Investing book:

[HamishHodder]

This is very important for those who want to pick individual stocks. ALWAYS use diluted EPS in your valuations.

[MichaelJayValueInvesting]

Many of the "non-recurring" expenses that businesses report have a habit of making their way back into future income statements. Good to be aware of as to not over estimate earnings. Enjoying this series!

[MrNurseinTExas]

Sven Carlin reads the biggest books, and then gives us the insight into it! Wonderful Youtube model! Browsing your older videos; such nuggets of wisdom!

[unknowninfinium]

Never knew about the outstanding stock stuff said in the video.

Really appreciate these videos Sven.

[MrMfran]

Sven thank you for your honest commentary. Fresh air compared to the typical b.s. you hear everywhere else.

[projectbrian]

I remember that you made a similarly helpful video in the past about using the cape ratio to smooth out any abnormal spikes in the pe ratio. Do you ever take the sector of a company into account when looking at the pe ratio? Tech companies for example have an average pe of 25, which is pretty high. Do you only invest in companies with low pe ratios? Is there a number that you will not go above? Thanks again. Your videos have been so helpful and I think that I would still be fumbling around in the dark without them!

[InvestingBookSummaries]

P/E ratios was one of the most crucial pieces of information for stock evaluations. Always have to look at things over the long term.

[jakewilson]

Sven I'm on chapter 2 of this book! Il watch this later don't want to spoil it! What other books do you recommend for a beginner investor?

[st.robespierre]

Where do you go to read a companies past and present financial statements? Currently I do it on websites such as market watch or yahoo finance, but I want something more accurate.

[matthcw]

Thanks for the video! Tip: Put "Chapter 12 Summary" in the title otherwise people looking specifically for this chapter will not easily find your video!

[dylanthompson]

Sven, great video and Amen to showing how adjusted earnings or Non GAAP earnings do not count....only GAAP matters. It always irritates me to see CNBC often report earnings as adjusted earnings as a beat for a specific company and when you you look at its GAAP earnings its often a miss on expectations. However, if a company beats on GAAP earnings they will report it as such. Sometimes, do you think television business shows intentionally try to mislead investors?

[IsaacWendt]

Is there anyway to protect yourself as a investor against diluted shares? I'm assuming you can't know weather a company will issue more shares in the future. Do they give you any special deal when they do? Sorry for what might seem like simple questions.

[ultramarineization]

as a newbie investor this is great info thank you

[MTTSLL]

I remember in a video of yours you were saying that you use 100 divided by PE to get quick look of the possible future yield. It's not clear to me if you are using TTM PE or projected PE. What are the flaws of that method?

[glauberpostatni]

Hi sven, how can i found out and calculate the real EPS? i am still beginner and i will start reading the intelligent investor next mouth.

[aditiarya]

Can you please suggest a easy software or any tool or webpage that will provide us with diluted EPS for last few years

[oliverreiche]

Like your pickup ideas. One little correction: US-GAAP vs. IAS (IFRS) and not IFRS

[potomacXX]

Graham said really well in his book, i think this was in security analysis, that dividends are a important to analyse from this perspective. If company says it has earnings of 10 million but distributes 1 million to shareholders through dividends, shareholder should ask what happened to those 9 million? I might very well be that those 9 millions are not really earnings at all.

[jcyxofp]

Hi Sven,

Another great video.
Good te learn how companies adjust the metrics in there advance.

Looking foreward tot the next video.

[Cora-Lia-]

Could you make a video about mergers. ..like for example wmd and hiku ...how could I know what is best to do sell shares or hold before the vote