equity: low P/E vs. high P/E equity, company, attractive, 小苗

Andreas42

why company with a low P/E is more attractive? Thanks.

Sportsman

this question is confusing at best. a stock could have a low p/e but higher than it's peers in the industry, so it may not be as attractive. I think the empirical evidence is for the small stocks and the P/B ratios (the FF factors).

Swanand

you get a higher earnings at the same price....

you paid 20$ for a share - got 10$ earnings.. vs. you paid a 100$ for a share and got 10$ earnings..

CP

CPATrader

It's not that simple.

There is evidence that investing in low P/E stocks tends to achieve higher returns on average, all else being equal.

Low P/E could just as easily mean that the market believes that future prospects for the firm aren't great, with earnings that are expected to remain stagnant or deteriorate.