What is the difference between the price to earnings ratio and the price to book ratio, and what pro

The price-to-earnings ratio is the ratio of some price per share to earnings per share. The numerator in the above formula is the current price per market, and the denominator can be used for the most recent year's earnings, or for the next year or years. The price-to-earnings ratio is one of the most basic and important metrics for estimating the value of common stock.

It is generally believed that it is normal for the ratio to remain between 20 and 30, and it is worth buying because the stock price is low and the risk is small; If it is too large, it means that the stock price is high and the risk is high, so you should be cautious when buying. However, high P/E ratios** are mostly popular stocks, and low P/E ratios** may be unpopular stocks.

The calculation method of the price-to-book ratio is: price-to-book ratio = **market price net assets per share **net value is: the total of the company's capital, capital reserve, capital community chest, statutory provident fund, arbitrary provident fund, undistributed earnings and other items, which represents the rights and interests enjoyed by all shareholders, also known as net assets.

The amount of net assets is determined by the operating conditions of the joint-stock company, the better the operating performance of the joint-stock company, the faster its assets will appreciate, the higher the net worth, and therefore the more equity the shareholders have. Therefore, the net value is the main basis for determining the direction of the market. If the embedded net asset value per share of a listed company is high and the price per share is not high, that is, the lower the price-to-book ratio, the higher the investment value.

The price-to-earnings ratio and price-to-book ratio are very detailed.

The ratio of stock price to earnings is called the price-to-earnings ratio, and the ratio of stock price to assets is called the price-to-book ratio.

The ratio of market capitalization to earnings, and the ratio of market capitalization to net assets.

The price-to-earnings ratio is the stock price divided by earnings per share, and the price-to-book ratio is the stock price divided by assets per share if I am not mistaken.

A high P/E ratio means that investors are willing to buy at a higher price, that is, they are optimistic about the company's future development.

This is the main reason why the GEM P/E ratio is above 50 times, while bank stocks are only about 10 times.

P/E ratio: Current profit after tax per market.

Price-to-book ratio: current net assets per market.

Theoretically, the smaller these two values, the safer. They represent the income and equity of your investment in the **.

In terms of valuation, the first step is to compare with peers. For example, in the steel sector, the average price-earnings ratio is about 15 times 20 times, and the price-to-book ratio is about 2 times. Bayi Steel's price-to-earnings ratio and price-to-book ratio are on the high side.

And then compare the concept, because Bayi Iron and Steel has the theme of mergers and acquisitions, then it can be appropriately overvalued, even if it is given 25 times the price-earnings ratio, the stock price should be close to or more than 7 yuan.

The price-to-earnings ratio and price-to-book ratio are only reference indicators for investment. If you want to invest, you need to refer to these. You don't care about these bands, some have very large price-earnings ratios, and they are still rising wildly. The P/E ratio is dynamic. It doesn't make much sense for band operations.

A P/E ratio of 20-40 is reasonable. Below 20, the investment value is higher. I can't say that the high is high, for example 601111 the P/E ratio is 825.

**Price-to-book ratio is the ratio of stock price to net assets per share.

The price-to-book ratio can be used for investment analysis. In general, a lower price-to-book ratio** has a higher investment value.

Net worth is an important basis for determining the trend of the market. Listed companies with high net asset value and low price per **, that is, the lower the price-earnings ratio, the higher the investment value.

On the contrary, the smaller the investment value, but when judging the investment value, the current market environment, the company's operating conditions, profitability and other factors should also be considered.

Refers to the transaction, relative to the value. The true meaning of the enterprise is the value of the company's assets, and the value of **** is equal to the earnings per share multiplied by the price-earnings ratio.

The index, also known as the ** index, dynamically reflects the relative index of the total market level in a certain period. Compiled by financial services companies based on the average calculated after a weighted average of some representative companies in the market.