A company with a low P/E may have been marked down for no readily apparent reason and thus an attractive value investment for those with the patience to wait while the market re-values it. However, the P/E is a backward-looking measure and just because the company earned £1 per share last year it doesn’t necessarily mean it will earn anything like that in the foreseeable future. Or, a low P/E can mean a company is deservedly cheap because it is in ﬁnancial difﬁculty – in this case the P/E is likely to become cheaper yet or the company even go into administration.
This book is a practical guide to how you can adjust and improve the price-earnings ratio and use it, alongside other ﬁnancial ratios, to run against the crowd and boost your stock returns.
"This book offers essential scientific reassurance, as well as practical tools, to triumph over misconceptions and behavioral errors that distort stock market prices. I recommend it to readers with great enthusiasm."
Werner De Bondt