is it correct to say this re: ROE and P/E? correct, company, return, direct

segalm

ROE has no direct effect on P/E, if return is paid out in dividend, p/e decreases, if return is reinvested within the company, p/e increases.


is this statement correct?

stalkey

some people define b as the dividend payout ratio instead of the earnings retention ratio. grumble is smart dude I'm sure he knows it is what you keep after dividends are paid out of NI.

flyinggirl

ROE affects PE through the payout ratio

5566

(1-b)/(r-g)=leading P/E

b=g/ROE

(1-(g/ROE))/(r-g)= P/E

as ROE falls so does P/E

bolligerallstar

ROE definitely affects P/E, by altering g.

g = (1-b)*ROE

As ROE falls, so does g. as g falls, so does P/E.

thecfawannabe

grumble Wrote:
-------------------------------------------------------
> ROE definitely affects P/E, by altering g.
>
> g = (1-b)*ROE
>
> As ROE falls, so does g. as g falls, so does P/E.


CORRECTION: g=(b)(ROE)

Other comment holds true.