Stock Market Trading > Price Earnings Ratio

Price Earnings Ratio

P/E = Price / Earnings or Price per share / Earnings per share.

Present Value of Growth Opportunities (PVGO) is another alternative method for stock valuation. Present value of growth opportunities is calculated by finding the difference between price of equity with constant growth and price of equity with no growth.

    PVGO = P(Growth) - P(No growth) = [D1/(r-g)] - E/r

where

    P  = Price of equity
    D1 = Dividend for next period
    r  = Cost of Capital
    E  = Earning on equity

The P/E ratio (price-to-earnings ratio) of a stock (also called its “earnings multiple”, or simply “multiple”, “P/E”, or “PE”) is a measure of the price paid for a share relative to the annual income or profit earned by the firm per share.

A higher P/E ratio means that investors are paying more for each unit of income. It is a valuation ratio included in other financial ratios.

The reciprocal of the P/E ratio is known as the earnings yield.

April 10, 2008

Money Masters

Money Masters Video Promotion.

Who is performing?

  • Nik Halik - Do what ever it takes!
  • Johnny Wimbrey - Create wealth with your mind
  • John Childers - Revealinbg the secrets!
  • Bob Proctor
  • Warren Black - Who is seriuos about making money?
  • Marshall Sylver
  • David Cavanagh
  • Adam Ginsberg - Successful people take action
  • Rick Otton
  • Peter Bland - Leaderships about making critical desicions at crital moments
  • Loral Langemeir - Millionaire status and double it!
  • Tom Hopkins
  • Stephen Pierce - Advance our positions!
  • Mike Filsaime
  • Adam Ginsburg

For a limited time only, you now have the ultimate opportunity to reward  yourself with the most informative and exclusive Mind and Wealth Prosperity events with Money Masters. Real people, real money, real results! Imagine How *Your* Life and Finances Will Be After You Are Personally Trained By The World’s Top Entrepreneurs For 3 Solid Days. This exclusive invitation may very well be the SHORT-CUT discovery you’ve been waiting for. The Greatest Investing, Business and Entrepreneurial opportunity ever imagined Never before has a more switched on group of Investment Money Masters gathered together in one venue to reveal the exact wealth strategies used to create wealth for themselves and their family. Let me prove it to you. Wealth is your destiny…so please, settle back in your favourite chair and  discover exactly how to claim it. I promise you’ll find the next few minutes time well spent.

April 9, 2008

Ice TV - is ICETV for REAL?

ICE TV IS :: The Australian free-to-air electronic program guide (EPG) for media centers and personal video recorders (PVRs).

The entertainment, video and multimedia market is undergoing sweeping changes. It is currently characterised by an expanding product offering, which nevertheless remains highly heterogeneous due to the fact that it covers devices from fields that were previously separate. At the heart of a digital home is the technical concept known as the Media Centre.

It combines Digital Video Recorder (DVR), also referred to as Personal Video Recorder (PVR), home networking, CD and DVD playback and MP3. Cable TV operators, telcos, consumer electronics and IT companies are all vying for the Media Centre business for the Digital Home. Progress in this market will continue to evolve with more mass market developments expected from 2008 onwards. In 2005 Foxtel launched its new DVR and free-to-air DVRs are now available at selected retailers. Austar is set to launch its DVR in 2007. The key to the success for DVRs is the EPG.
 

March 24, 2008

Equity Contracts for Difference

Isn’t it about time you embraced the CFD Mastery Revolution?

Equity Contracts for Difference ((CFD)s) are growing rapidly in  popularity and, for the basic or experienced investor, are proving an attractive means of gaining exposure to the economic
performance and cash flows of individual equities without the need to invest in the physical share.

(CFD)s are geared  or leveraged instruments. This means that a deposit from as little as 10% of the value of the (CFD) is required.

Consequently, it is possible to hold a position 10 times greater than would be possible with a traditional investment. A (CFD) is a financial instrument linked to the underlying share price.

Consequently, no rights are acquired or obligations incurred relating to the underlying share and, depending on your view of a company’s share price, you can buy (go long) or sell (go short).

Nik Halik.

March 16, 2007

Property Investing Simple

If real estate investing was a game, the end objective would be to own as much profitable property as possible. Owning deals that lost money would make it harder to win and would therefore be avoided.While real life property investing should follow the same game plan, many investors substitute alternative objectives that make investing a lot more complicated than it needs to be.

For example, negative gearing is a commonly used strategy where it is seen as okay to definitely lose money in the short term, so long as you might make a profit in the long term.

I suggest that you avoid such fancy thinking and instead keep your investing as simple as possible, which means that you should only buy property that makes an identified profit within an established timeframe. If you do this then you must win the investing game, the only a question is when!

It’s very hard to play, let alone win, a game when you don’t know the rules. If you’d like to know how to be a smart player of the property game and continue to win profitable deals, then make sure you join my R.E.S.U.L.T.S. mentoring program.

- Steve McKnight

March 12, 2007

Stock Report

Promina, Oil Search, One Steel, Virgin Blue, Aristocrat, Fosters, Suncorp,
CSL, Brambles, Toll, Woodside, Oxiana and Santos.

NOTE: this is not an exhaustive list but a great starting point.

The following is some light reading for people that like to know what their
Government is up to these days.

Is the following information part of an elaborate conspiracy theory or the truth?

We saw all of the opposition towards the “Australia” card which was seen as
the government’s way of getting the upper hand on us. The card was shot down
by the people as an invasion of privacy, so what now?

The latest attempt by the Government to persist with this theory of keeping a
closer eye on us is the SmartCard. Why you might ask. The forced fed advertising
for the GREAT benefits of this card being put in front of us is that we will be able
to combine a lot of different cards (Medicare, Social Security, HealthCare etc, etc,
etc.)

On the surface this sounds great, as there will be a reduction in the cost of
maintaining so many different cards and duplication databases, which all costs
money, for the different departments/companies.

So what is wrong with that, I hear you ask. Let us now look at what is actually
proposed for this card and only drip released to us so we do not get the total
picture of the project.

Firstly they tell us that we will need to combine all of the databases into one
location, meaning that every company/department that has some data in there
can see everything about you.

Lets us now throw a photo on the card and therefore also into the database, with
the excuse of “Card Crime” prevention measure. What you now have is an identity
card that can track you, every time you use the card and everywhere you go.

Have you heard of Biometric Photographs? They are basically normal photos that
have had certain measurements recorded about the structure of your face and
recorded in the database. These values can now be searched by a computer to
find matches.  This data is already part of the new passports and is going to be
part of the SmartCard we now find out

So what, you say. Why all this fuss if you do nothing wrong you have nothing to
worry about. Did you know that this database will be made available to ASIO,
Customs and the Police department? It is interesting that when this suspicion was
first raised we were told that ASIO and the Police would need a search warrant to
access the data BUT nobody was told that there is already some “existing
overriding legislation” in place making that step redundant.

This Biometric data will give the agencies the ability to use facial matching
capabilities for tracking your every move. There have been a lot of smaller scale
tests run all over the world. Some security cameras around some cities and
Airports have been connected to this technology for some time to get some road
testing results.

Have you noticed that some airports have now started to make you walk through
a narrow passage that has a large number of cameras pointing down at you? This
is the simplest method for gathering all-round facial images for the purpose of
processing.

It is not about having something to hide it is about having FREEDOM and not
having BIG BROTHER looking over your shoulder at every turn. What is next - an
electronic chip implanted in your hand? Sorry, too late, this is also already being
tested for mass distribution.

Till next we meet, heres looking at you.

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‘Property, Stock Market, Business, Internet, eBay, Finance, Tax, Peak
Performance Entrepreneur Superstars Gather For A *PRIVATE* Wealth Event NOT
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February 19, 2007

Earnings guidance

Earnings guidance

Nearly every earnings announcement will be broken into two parts; what has been and what will be. The earnings season is also the time that management of companies comment on the future outlook of their business and the economy in general. These announcements have been called earnings guidance, and are as important as the actual earnings of the company. This is because people who buy shares, or choose to hold them, do so not because of what earnings were in the past but what they are likely to be in the future. This is also the time management announce major changes to business plans and key staff.

Companies listed on ASX are required to adhere to a regime of ‘continuous disclosure’ whereby they must immediately announce to the market any events that are likely to have a material effect on their share price.  There are some exceptions to this rule but generally, earnings season can sometimes be as much about setting the scene for the next period, as it is the results of the past. Investor can get a better understanding of how a company plans to operate for the coming year and the environment it will be operating in. The purpose of the whole event is to inform share holders and investors, helping them make better investment choices.

More information

ASX offers a number of classes that cover analysis of a company’s annual report, in particular the Tracking your sharemarket investment and Analysing and selecting shares classes.  These classes are available free online, please visit the ASX website for more information. http://www.stockmarket-trading.com/investor/education/classes/online.htm

March 14, 2006

Price earnings ratio

Price earnings ratio

One of the most popular ways of comparing companies is by using a ratio called the Price to Earnings ratio or P/E’s. This is found by dividing today’s price by the last current earnings and shows the number of times the price covers the earnings. Investors commonly use this ratio to measure the attractiveness of particular shares and to compare shares in one company with those in another. Put another way, how long will it take the earnings to cover the price paid for the shares.

As an example, if a share cost $10 and the earnings are $1 per year, it will take ten years of earnings to pay back the price of the share. This is a P/E of 10. Investors use this to compare businesses, assuming that earnings are the live blood of a business and the P/E is the pulse rate.

Analysing Annual Reports

Analysing Annual Reports

Every six months, the companies listed on ASX are required to announce their earnings for the period just past. This time of year has been dubbed ‘Earnings Season’, and is eagerly awaited by investors of every type. Not only does it indicate how companies have performed, it is also the time clues are given to future performance.

Volatility Tutorial

Stock Market Volatility - in general, the greater the volatility of the underlying asset, the greater the time value will be.  According to Nik Halik of the Financial Freedom Institute (FFI), this is due to the fact that an Options Writer is exposed to a greater probability of incurring a loss, and will require higher premium income to compensate for the increased risk.

Interest rates - an increase in interest rates will lead to higher call option premiums and lower put option premiums, all else being equal. This reflects the cost of funding the underlying shares.

The taker of a call option can defer paying for the shares until the option’s expiry date, and invest the funds elsewhere during this period. As interest rates rise, more interest can be earned on the funds, so the call option is worth more to the option taker.

The effect of an interest rate rise is the opposite for put options, as the taker is deferring the receipt, rather than the expenditure of funds. When using interest rates in an option pricing model, the risk free rate which matches the life of the option is usually used. So, for example, for a three month option the three month bank bill rate would be used.

Dividends - if a dividend is payable during the life of an option, the premium of a call option will be lower, and the premium of a put option higher, than if no dividend was payable.

This is because shares tend to fall in value on going ex-dividend, all else being equal. Anything that leads to lower share prices will make call options less valuable, and put options more valuable.

Market expectations - ultimately, the pressures of supply and demand determine the value of options.

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