The price-to-earnings ratio (P/E ratio) is calculated as a stock’s current share price divided by its earnings per share (EPS) for a twelve-month period (usually the last 12 months, or trailing twelve months (TTM)). Most of the P/E ratios you see for publicly-traded stocks are an expression of the stock’s current price compared against its previous twelve months’ earnings.
Although the EPS figure in the P/E is usually based on earnings from the last four quarters, the P/E is more than a measure of a company’s past performance. It also takes into account market expectations for a company’s growth. Remember, stock prices reflect what investors think a company will be worth. Future growth is already accounted for in the stock price. As a result, a better way of interpreting the P/E ratio is as a reflection of the market’s optimism concerning a company’s growth prospects.
If a company has a P/E higher than the market or industry average, this means that the market is expecting big things over the next few months or years. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the stock price will need to drop.
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Halliburton Company (NYSE:HAL) at $38.35 has one of the highest P/E ratio of all companies trading on the U.S. Exchanges. It is trading at 123.71 times the prior four quarters’ worth of earnings. The current share price is up 24.57% from its 52-week low and down -23.68% versus its peak. The company has a market cap of $32.52 billion and is part of the Energy and Oil Related Services and Equipment – NEC industry. The key competitors include Superior Energy Services, Inc.(NYSE:SPN), Newpark Resources Inc(NYSE:NR) and Seventy Seven Energy Inc(NYSE:SSE).
Halliburton Company provides a range of services and products to the upstream oil and natural gas industry worldwide. The company operates through two segments, Completion and Production, and Drilling and Evaluation. The Completion and Production segment provides production enhancement services, including stimulation services and sand control services; and cementing services that include bonding the well and well casing, and casing equipment. It also provides completion tools that offer downhole solutions and services, including well completion products and services, intelligent well completions, liner hanger systems, sand control systems, and service tools; and well intervention services, pressure control, equipment rental tools and services, and pipeline and process services.
Vipshop Holdings Ltd – ADR (NYSE:VIPS) has dropped -25.62% on the year, and it also has the high P/E ratio on Wall Street at 48.20. The stock, currently at $16.80, is up 40.35% from its 52-week low and down -45.08% versus its peak. It trades at an average volume of 16.59 million shares and has a beta of 1.31. The company is down -13.66% year-to-date as of the recent close with a market cap of $4.7 billion. It is part of the Cyclical Consumer Goods & Services and Discount Stores – NEC industry. The key competitors include JD.Com Inc(ADR)(NASDAQ:JD), Alibaba Group Holding Ltd(NYSE:BABA) and Lightinthebox Holding Co Ltd-ADR(NYSE:LITB).
Vipshop Holdings Limited, through its subsidiaries, operates as an online discount retailer for various brands in the People’s Republic of China. It offers a range of branded products, including women’s apparel, such as casual wear, jeans, dresses, outerwear, swimsuits, lingerie, pajamas, and maternity clothes; men’s apparel comprising casual and smart-casual T-shirts, polo shirts, jackets, pants, and underwear; women and men shoes for casual and formal occasions; and accessories consisting of belts, jewelry, watches, and glasses for women and men.
Another highest P/E belongs to Yahoo! Inc. (NASDAQ:YHOO), which is trading at 133.44 times the prior four quarters’ worth of earnings. The share price has zoomed -34.64% this year. The company has a market cap of $31.27 billion and is part of the Technology and Search Engines industry. The key competitors include Yelp Inc(NYSE:YELP), Dex Media Inc(NASDAQ:DXM) and IAC/InterActiveCorp(NASDAQ:IACI). The stock with recent price of $33.36 trades at an average volume of 15.32 million shares. The share price is up 22.65% from its 52-week low and down -36.17% versus its peak. It has a beta of 1.37.
Yahoo! Inc. provides search and display advertising services on Yahoo properties and affiliate sites worldwide. The company offers Yahoo Search that serves as a starting point to navigate the Internet and discover information; and Yahoo Answers, which enables users to seek, discover, and share knowledge and opinions across mobile phones, tablets, and desktops. It also provides Yahoo Mail that connects users to the people and things; Yahoo Messenger, an instant messaging service; and Yahoo Groups, which allows users to join groups based on shared interests and involvements.
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