Stack looks at historical measures of valuation: price-to-book ratios, price-to-dividend ratios and price-to-earnings ratios.
My previous post elaborated on the probable value as measured by price-to-book ratios (PBRs) now available in the Japanese stock market.
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It holds Apple and Sun, but also some dot-coms and smaller techs, all having lots of cash and low price-to-earnings and price-to-book ratios.
The stocks of Chinese banks fell this year and were trading at price-to-book ratios that assumed these institutions would suffer substantial losses on their loan portfolios.
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He screens for stocks using academic theories, which mostly boils down to companies with low price-to-book ratios, low price-to-earnings ratios, low short interest and positive earnings momentum.
For long picks, the Ward Ferry team puts a lot of emphasis on such classic numbers as return on equity, free cash flow, dividend yields and price-to-book ratios.
To give two high-profile examples, Ibbotson and Associates and the academic duo of Eugene Fama and Kenneth French did similar studies that found that value stocks, as measured by low price-to-book ratios, outperform growth stocks over the long run.
Although many companies announce they "plan" to buy back their shares, Fried filters out the noise and goes for companies actually doing the buybacks and then screens for stocks trading at low price-to-earnings ratios, low price-to-book ratios and which meet an overall "value" criteria.
Use multiple valuation metrics--not just the ratio of price-to-earnings but the ratios of price-to-sales and price-to-book.
IPOs has always been strongly correlated with market peaks, measured by the ratio of capitalisation to the book values of companies and by price-earnings ratios.
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