ayodayo

i think the idea of E/P is not to go into the entire whole analysis you did above. But the simple thought process is as follows:
If you had 3 companies you were comparing, all with negative P/E - and you wanted to invest in 1 of them, definitely - which one would you choose?
When you are comparing positive P/E companies - lower is better…. relatively.
but when you have a company with a negative earnings - it is lower than the +ve numbers - so is lower better still? or would you just pass on the opportunity of investment in the company because it had negative earnings which might be due to temporary effects - and miss out on the investment opp?
Go one step further - and all your companies you are analysing had negative earnings - and that’s all your investment universe was…