PE Ratio Explained (With Examples)

Don’t use the PE ratio until you watch this video. In this video, you will learn about the most popular valuation ratio: the Price to Earnings ratio. The PE ratio helps you to see how cheap or how expensive a company is but be careful, there's a secret about the PE ratio you need to understand.

BEST INVESTING BOOKS
📚 The Little Book That Still Beats the Market
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📚 The Complete Investor
📚 Richer, Wiser, Happier
📚 The Dhandho Investor
📚 Tao of Charlie Munger
📚 The Complete Financial History of Berkshire

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TIMESTAMPS
00:00 PE Ratio in Stock Market
01:27 PE Ratio Simple Example
02:25 Where the E of the PE ratio comes from
04:30 Valuation for a Bakery Business
07:04 CocaCola and McDonalds Compared
07:55 Most important lesson of this video
09:44 Earnings growth rate

Special thanks to my incredibly beautiful, smart, and creative girlfriend, Stephanie, for her editing wizardry and creative insights and ideas. Although you do not see her speaking to you in the videos, believe me, she has poured her heart and soul into making this video and the videos on this channel. It's been a 50/50 effort. I don't want to even imagine what these videos would look like without her hard work and creative insights. Thank you.

Disclaimer:
These youtube videos and content are for entertainment purposes only. If stocks or companies are mentioned, Richard may have an ownership interest in them -- DO NOT make buying or selling decisions based on Richard’s videos. All information contained herein should not be construed as anything other than an opinion for entertainment purposes only. Information being provided may be outdated or inaccurate; it is your responsibility to verify all information.
No financial advice is being given nor is any other advice of any kind. You should consult with a qualified professional where appropriate and before any action is taken on this video. No liability or damages shall take place because of this video and/or content.
There is no express or implied representations or warranty with respect to the accuracy or completeness of the content of the videos, including any content, description, links, or resources shared, including those by third parties. Furthermore, all parties specifically disclaim any and all express or implied warranties of merchantability or fitness for a particular purpose. By watching this and all related videos, you agree to be bound by this disclaimer.

#StockInvesting #StockMarketForBeginners #ValueInvesting

[warbearin]

I appreciate this guy explains things in a very simple and straight forward way that makes it easy to follow along. Great job!

[frank]

It’s so good he is explaining it in sign language too

[LevKarasin]

I've watched a few of your videos. What I love most is how easy it is to understand what you are saying and to be able to apply it quickly in my investing strategies. Thank you

[grizzlephotovideo]

I recently came across your videos and I love them! You explain things so well. I just wish you were still making videos!

[willtischler]

Getting to the point where I find myself looking forward to the new videos every week. Nice work again guys

[DaddyDebt]

Thanks for sharing this key fundamental. I have trouble still on which value to use for earnings. It seems like their are so many values after adjustment. New subscriber here!

[prantiksaha]

Very educational. Thanks for making such a good video.

[orrinjonesjr]

Very straight forward what I'm still trying to understand is. If I owned the bakery that generated the 50k per year. I would recieve income as well as still owning the asset. But if I buy stocks even though the EPS says that the company is generating X income per share. I the investor do not recieve any income. I can only hope for the stock price to increase.

[lalasong]

Clear and easy explanation to understand. Thanks!

[kranthi]

Awesome... Such a great example... Learnt with simple way... Thank you very much Richard..

[ankitmehrotra]

If the company is a small cap and has growth potential of 2x next year the PE even if currently 100 would be halfed. I say market is always future looking growth.

[vaibhavKumar-ep]

the best teacher i never had until now 🥸

[DrJarimba]

You have a talent for explaining... Just need to find your niche so your content becomes higher value add. I'll follow you on your journey. Good luck.

[fordrivingandothers]

hey there for the last part around 9:20, how did we get the ROIS of 136 and 55.50 percent?

[jbsanchez]

I love that explanation, very simple..thanks

[catherineevel]

Great information regarding that there is more to it the just looking at the PR ratio. And the importance for net income vs gross income. Thanks for all the great information.

[DrJarimba]

Who can reliably predict earnings growth into the future beyond 1-2 years?? 2020 has given a clear answer to that.

[LevonMägi]

can you compound the earning per share that they make more profit annually or is it a company insider stuff?

[jadegill]

How do we calculate EPS growth rate in the future?

[mr.grantsartexplorations]

Awesome, thanks. Is the second part Forward PE?