10 Sep 2024
Market Metrics: Listed Companies
- Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner
The forward P/E ratio (price to earnings ratio) is a measure of the current share price of a company divided by the estimated future earnings per share of that company.
Meaning, a lower forward P/E ratio is generally better because it implies that you will pay a lower price for the listed company.
Attached is a forward P/E ratio for all 11 market sectors in Australia and a comparison of Australian listed companies against listed companies on other global stock exchanges.
Click for chart.
What is the chart saying?
Technology in Australia is expensive at 91.2 forward P/E ratio and same can be said globally with the NASDAQ at a 27.2 forward P/E ratio.
There are also value buying opportunities such as in German, England and China (DAX Performance, FTSE 100, and Shanghai) with forward P/E ratios measuring between 10 to 12 times.
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