Enterprising Investor
Practical analysis for investment professionals

PE ratio


Myth-Busting: Low Rates Don’t Justify High Valuations

Lower interest rates may not, in fact, lead to higher P/E ratios.

Dumb Alpha: Trailing or Forward Earnings?

In the spirit of dumb alpha, we can say that simple trailing P/E ratios are far better value indicators than forward P/E ratios. Or as I tell my colleagues at work: Never ever use forward P/E ratios. Ever.