Here's how P / E ratios can help us understand Bouvet ASA (OB: BOUVET)

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<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "This article is written for those who want to better use the price / earnings ratios (P / E ratios) .To keep this practical, we will show how Bouvet ASA (OB: BOUVETThe P / E ratio can help you evaluate the proposed value. Bouvet has a P / E ratio of 15.22, based on the last twelve months. This equates to a return of about 6.6%. "Data-reactid =" 27 "> This article is intended for those wishing to improve the use of price / earnings ratios (P / E ratios), we will show how the P / E ratio of Bouvet ASA (OB) : BOUVET) can help you evaluate the proposed value. Bouvet has a P / E ratio of 15.22, based on the last twelve months. This equates to a return of about 6.6%.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " Discover our latest analyzes for Bouvet "data-reactid =" 28 "> Discover our latest analyzes on Bouvet

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Want to help shape the future of tools and investment platforms? Participate in the survey and participate in one of the most advanced studies of stock market investors to date."data-reactid =" 29 ">Want to help shape the future of tools and investment platforms? Take the survey and participate in one of the most advanced studies of stock market investors to date.

How do you calculate a P / E ratio?

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Price / earnings ratio = Price per share ÷ Earnings per share (EPS)

Or for Bouvet:

P / E of 15.22 = NOK204 13.4 NOK (Based on the twelve months prior to September 2018.)

Is a high price-earnings ratio good?

<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "A higher P / E ratio means that investors are paying a higher price for every NOK1 business profit. All other things being equal, it's best to pay a small price – but as Warren Buffett has said, "It's far better to buy a wonderful company at a reasonable price than the one you want." a fair society at an exceptional price ". "Data-reactid =" 36 "> Higher P / E ratio means investors pay a higher price for every NOK1 business profit. All other things being equal, it's better to pay a small price – but as Warren Buffett said, "It's better to buy a great company at a fair price than to be fair at a great price". .

How growth rates affect P / E ratios

Profit growth is probably the most important factor in determining a company's P / E ratio. As incomes rise, the "E" increases over time. This means that if the course of the action does not increase, the P / E will be reduced in a few years. Then, a lower P / E should attract more buyers, which would raise the share price.

Bouvet saw its earnings per share increase by 39% last year. And its annual growth rate of 5-year EPS is 16%. We therefore generally expected a relatively high P / E ratio.

How does the Bouvet C / B ratio compare to its peers?

The P / E ratio indicates whether the market has greater or lesser expectations of a company. We can see in the image below that the average P / E (19.1) of companies in the information technology sector is higher than that of Bouvet.

OB: BOUVET PE PEG Gauge 11th January 19

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<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "This suggests that market players think that Bouvet sub- If the current expectations are low, the stock may be underestimated if the situation is better than the market presumes.If you consider that the title is interesting, further research is recommended. I often watch purchasing and selling director. "data-reactid =" 54 "> This suggests that market participants believe that Bouvet will perform less well than other companies in its industry." Current expectations are low, but the stock could be undervalued if the situation is better than that of the market interesting actions, further research is recommended, for example, I often monitor purchasing and selling director.

Do not forget: the P / E does not take into account debts and bank deposits

It is important to note that the P / E ratio takes into account the market capitalization and not the value of the company. This means that it does not take into account debt or cash. In theory, a company could reduce its future P / E ratio by spending its cash (or borrowing it) for higher profits.

These expenses may be good or bad in the long run, but the fact is that the balance sheet does not reflect this ratio.

Bouvet report

Bouvet, which has a net cash position of 63 million euros, can invest in growth, which justifies a higher P / E ratio than otherwise.

The verdict on the Bouvet C / B ratio

The Bouvet P / E is 15.2, which is above average (12.7) in the NO market. Its solid balance sheet gives the company many resources for further growth, and it has already proven that it can grow. So, it does not seem strange that the P / E is above average.

<p class = "canvas-atom-text-canvas Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Investors have an opportunity when market expectations for a stock People often underestimate remarkable growth – so that investors can earn money when rapid growth is not fully appreciated.We have no forecasts from analysts, but the shareholders might want to consider this detailed historical graph data-reactid = "62"> Investors have an opportunity when market expectations of an action are wrong. They often underestimate remarkable growth – so they can earn money when rapid growth is not fully appreciated. Analysts have no forecasts, but shareholders may want to review this detailed historical chart of earnings, revenues and cash flows.

The story continues

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Of course, you could find a fantastic investment by looking at some good candidates. So take a look at this free list of companies with little or no debt, whose P / E is less than 20. "data-reactid =" 67 "> Of course, you could find a fantastic investment by looking at some good candidates. So take a look at this free list of companies with little or no debt, whose P / E is less than 20.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "To help readers understand the past volatility of the financial market in the short term, our goal is to provide you with a long-term research analysis based solely on fundamental data. Note that our analysis does not take into account the latest price sensitive business announcements.

The author is an independent contributor and, at the time of publication, was not positioned in the mentioned actions. For errors requiring correction, please contact the publisher at the address editorial-team@simplywallst.com.

"data-reactid =" 68 "> To help readers understand the short-term volatility of the financial market, we aim to provide you with a long-term research analysis based solely on fundamental data. account of the latest price sensitive business announcements.

The author is an independent contributor and, at the time of publication, was not positioned in the mentioned actions. For errors that need to be corrected, please contact the publisher at editorial-team@simplywallst.com.