【morpheus8 settings for face】Read This Before You Buy Advanced Share Registry Limited (ASX:ASW) Because Of Its P/E Ratio
This morpheus8 settings for facearticle is for investors who would like to improve their understanding of price to earnings ratios (P/E ratios). We’ll show how you can use Advanced Share Registry Limited’s (
ASX:ASW
) P/E ratio to inform your assessment of the investment opportunity.
Advanced Share Registry has a price to earnings ratio of 12.32
, based on the last twelve months. That means that at current prices, buyers pay A$12.32 for every A$1 in trailing yearly profits.
See our latest analysis for Advanced Share Registry
How Do You Calculate A P/E Ratio?
The
formula for P/E
is:
Price to Earnings Ratio = Price per Share ÷ Earnings per Share (EPS)
Or for Advanced Share Registry:
P/E of 12.32 = A$0.66 ÷ A$0.054 (Based on the year to June 2018.)
Is A High P/E Ratio Good?
A higher P/E ratio means that investors are paying
a higher price
for each A$1 of company earnings. That isn’t a good or a bad thing on its own, but a high P/E means that buyers have a higher opinion of the business’s prospects, relative to stocks with a lower P/E.
How Growth Rates Impact P/E Ratios
P/E ratios primarily reflect market expectations around earnings growth rates. That’s because companies that grow earnings per share quickly will rapidly increase the ‘E’ in the equation. Therefore, even if you pay a high multiple of earnings now, that multiple will become lower in the future. A lower P/E should indicate the stock is cheap relative to others — and that may attract buyers.
Most would be impressed by Advanced Share Registry earnings growth of 11% in the last year. And it has bolstered its earnings per share by 7.2% per year over the last five years. So one might expect an above average P/E ratio.
How Does Advanced Share Registry’s P/E Ratio Compare To Its Peers?
The P/E ratio indicates whether the market has higher or lower expectations of a company. If you look at the image below, you can see Advanced Share Registry has a lower P/E than the average (13.6) in the capital markets industry classification.
ASX:ASW PE PEG Gauge January 1st 19
Its relatively low P/E ratio indicates that Advanced Share Registry shareholders think it will struggle to do as well as other companies in its industry classification. While current expectations are low, the stock could be undervalued if the situation is better than the market assumes. If you consider the stock interesting, further research is recommended. For example, I often monitor
director buying and selling
.
A Limitation: P/E Ratios Ignore Debt and Cash In The Bank
The ‘Price’ in P/E reflects the market capitalization of the company. That means it doesn’t take debt or cash into account. In theory, a company can lower its future P/E ratio by using cash or debt to invest in growth.
Such expenditure might be good or bad, in the long term, but the point here is that the balance sheet is not reflected by this ratio.
Advanced Share Registry’s Balance Sheet
The extra options and safety that comes with Advanced Share Registry’s AU$4.3m net cash position means that it deserves a higher P/E than it would if it had a lot of net debt.
The Bottom Line On Advanced Share Registry’s P/E Ratio
Advanced Share Registry trades on a P/E ratio of 12.3, which is below the AU market average of 14.5. Not only should the net cash position reduce risk, but the recent growth has been impressive. The below average P/E ratio suggests that market participants don’t believe the strong growth will continue.
When the market is wrong about a stock, it gives savvy investors an opportunity. As value investor Benjamin Graham famously said, ‘In the short run, the market is a voting machine but in the long run, it is a weighing machine.’ We don’t have analyst forecasts, but you might want to assess
this data-rich visualization
of earnings, revenue and cash flow.
Of course,
you might find a fantastic investment by looking at a few good candidates.
So take a peek at this
free
list of companies with modest (or no) debt, trading on a P/E below 20.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at
.
View comments
下一篇:Bullish Near-Term Prospects for Insurance Brokerage Industry
相关文章:
- More than one-third of small businesses may not last a month: poll
- Is Prospect Capital (PSEC) Outperforming Other Finance Stocks This Year?
- Zooming in on TSE:WPM’s 1.9% Dividend Yield
- Activision Blizzard plans to terminate CFO Neumann
- Ireland to replace British travel ban with stricter testing - minister
- EarthWater New Year – New You Celebration of Life & Health – Contest to Receive EarthWater for One Year
- 10 Top-Ranked ETFs That Crushed the Market in 2018
- ‘FLTR’ ETF an Effective Countermove for Rising Rates
- Our Take On Avery Dennison's (NYSE:AVY) CEO Salary
- Judge Considers Gag Order in Warning to Roger Stone
相关推荐:
- Crude Oil Price Update – Needs to Hold Major 50% Level at $36.07 to Sustain Upside Momentum
- Apple’s China Trouble Makes Trump’s Trade War Harder to Defend
- READ NOW: Monteverde & Associates PC Launches an Investigation of the Board of Directors and Officers of Community First Bank– CMYF
- With All Eyes on Ultima Thule, a Chinese Rover Is Set to Land on the Moon’s Far Side
- Unibail-Rodamco-Westfield (“URW”) announces tender offer results
- BRIEF-China National Complete Plant Import & Export Signs Agreement With Russia's Kortors
- San Bernardino shooting lawsuits vs Facebook, Google, Twitter dismissed
- Australia's Healthscope recommends Brookfield deal, shares surge
- StepStone Real Estate Adds Margaret McKnight as Partner
- AP Top Extended Financial Headlines at 10:55 p.m. EST
- Dollar Slumps to Multi-year Lows; EUR/USD tracks 1.20
- Home of the Week: Bird Streets aerie offers a showcase of design
- StepStone Real Estate Adds Margaret McKnight as Partner
- Weekly CEO Buys Highlight
- Calculating The Fair Value Of Motorola Solutions, Inc. (NYSE:MSI)
- Vior Completes Till Sampling and Expands Its Land Position at Skyfall, Abitibi, Quebec
- Avenue Therapeutics Announces Publications in Peer-Reviewed Journals
- This Alibaba Stock Correction Offers an Opportunity You Can’t Refuse
- Platinum Group Metals Ltd. Completes At-The-Market Offering
- Global Virtual Reality in Aerospace and Defense Thematic Report 2020: Lower Prices and New Launches in 2020 are Expected to Encourage Growth