Chart Discussion

[347Mike]

Would a P/E ratio of 24.23 with a share price of $24.60 be considered high?

[slow99]

Would a P/E ratio of 24.23 with a share price of $24.60 be considered high?

Share price has nothing to do with the p/e being cheap or rich.

[347Mike]

I guess I am still lost then. If you get the P/E from the EPS and share price then how would that not be connected with the share price? In an earlier post you mentioned you could compare it to other companies in the same industry, although I am not seeing how the P/E for company ABC can be compared to company XYZ when of course they will have different earnings. I guess I still have reading to do.

How do I find historical P/E's for a company?

[slow99]

I guess I am still lost then. If you get the P/E from the EPS and share price then how would that not be connected with the share price? In an earlier post you mentioned you could compare it to other companies in the same industry, although I am not seeing how the P/E for company ABC can be compared to company XYZ when of course they will have different earnings. I guess I still have reading to do.

How do I find historical P/E's for a company?

Because P/E is a ratio of price to earnings. It isn't Price separated out then earnings separated out. You're combining the two.

P/E = price/earnings. What if a stock is $100 per share and its earnings are $10? The P/E is 10x. What if a stock is $20 and its earnings are $0.50...its P/E is 40x. Just because price is "X" it has no bearing on the P/E Ratio.

P/E ratio is a measure of risk and growth.

Share price alone is also not a measure of the worth of a company. Splits/reverse splits don't change anything fundamentally.
True company value is determined by Market Capitalization and Enterprise Value.

I use paid services at work to look at historical P/E. I'm sure you can just google "historical p/e" and find something.

[slow99]

Think of it this way... if a company's share price is $100 and earnings were $10, the P/E would be 10x. If the price were $100 and earnings were $2, the P/E would be 50x.

Now take a company trading at $20. If earnings were $2 the P/E would be 10x. If earnings were .40 the P/E would be 50x.

Each share price (a share at $100 or a share at $20) can have a P/E of 10 or 50... share price has nothing to do with the P/E being "high" or "low".

[Broncojohnny]

Etrade will let you overlay a P/E line over a graph of historical share price.

P/E is a relative measure only. You can compare P/E ratios between two companies in the same industry to try and gauge which company has "cheaper" shares relative to their earning power. Really P/E is just a basic conversation piece and means little. I only think about it when it comes to the S&P 500. The historical P/E of the S&P is in the 16-17 range. That fact matters little because the entire market can get completely out of whack for years and trade over a 20 P/E or under a 10 P/E the whole time. It has happened before and will happen again.

[347Mike]

I did some googling and I found that Nasdaq's site has a lot of useful information surrounding this. A lot of it also seems to be automated and it gives recommendations as to where the company will be in 12 months. It did however mention it was all a calculation on existing numbers and that scares me a bit. It scares me considering a month ago the stock in question dropped 33% and any historical numbers would definitely skew any "forecast" if it contains historical information.

A lot of this may not fit into part of the puzzle right now, but just like anything else the more I hear and read this stuff it will eventually start to make sense. Thanks again guys.

[slow99]

I did some googling and I found that Nasdaq's site has a lot of useful information surrounding this. A lot of it also seems to be automated and it gives recommendations as to where the company will be in 12 months. It did however mention it was all a calculation on existing numbers and that scares me a bit. It scares me considering a month ago the stock in question dropped 33% and any historical numbers would definitely skew any "forecast" if it contains historical information.

A lot of this may not fit into part of the puzzle right now, but just like anything else the more I hear and read this stuff it will eventually start to make sense. Thanks again guys.

Finisar? Lol I cover that name.

[347Mike]

Finisar? Lol I cover that name.

Yes. The whole IT sector from what I can see has taken a shit since this government furlough talk. It is ironic and I am kicking myself in the ass because I had a feeling this would happen but something made me jump back in.. Finisar however seem to take the brunt of the force, unfortunately. First mistake, and I know better.

[slow99]

Yes. The whole IT sector from what I can see has taken a shit since this government furlough talk. It is ironic and I am kicking myself in the ass because I had a feeling this would happen but something made me jump back in.. Finisar however seem to take the brunt of the force, unfortunately. First mistake, and I know better.

It isn't govt. It's a classic inventory correction.

[347Mike]

It isn't govt. It's a classic inventory correction.

The 33% dip, yes, but most of the technology sector has been going down.

I also have about 40 symbols on my Scottrade account, half being IT and they have been mostly red. Also, out of all of those I only had 3-4 in the green today with quarter percent gains. This is just an observation I made over the past week.

http://finviz.com/map.ashx?t=sec

With that being said though, where do you see Finisar ending up? Nasdaq says $36ish, I don't believe that so much since it's numbers are being pulled on skewed data.

[slow99]

The 33% dip, yes, but most of the technology sector has been going down.

I also have about 40 symbols on my Scottrade account, half being IT and they have been mostly red. Also, out of all of those I only had 3-4 in the green today with quarter percent gains. This is just an observation I made over the past week.

http://finviz.com/map.ashx?t=sec

With that being said though, where do you see Finisar ending up? Nasdaq says $36ish, I don't believe that so much since it's numbers are being pulled on skewed data.

What do you mean, "skewed data"?

[Sean88gt]

What do you mean, "skewed data"?

Hop on fb.

[347Mike]

What do you mean, "skewed data"?

If the stock rose to $40+, then fell 33% due to inventory correction and have a class action lawsuit filed against them for this reason, I would say the stock ever going that high was due to the false information. Wouldn't you agree?

[slow99]

If the stock rose to $40+, then fell 33% due to inventory correction and have a class action lawsuit filed against them for this reason, I would say the stock ever going that high was due to the false information. Wouldn't you agree?

I am honestly not following your logic at all. If you see a price target somewhere, that is set by the analysts covering it (ie me and my team). We reset expectations and price targets lots of time before and always after any significant event, and always after an earnings release - and more importantly guidance.