Earnings Growth Potential Implicit in Price-Earnings Ratio

DOI

10.2991/essaeme-17.2017.26How to use a DOI?

Keywords

P/E ratio, earnings growth rates, correlation, Beta

Abstract

P/E ratio has enjoyed high popularity as a simple tool to determine whether a stock is undervalued, but its determinants remain unclear and controversial. Earnings growth rate is regarded as a main factor. Looking backward, some theories perceives growth rates as randomly distributed across years thus offer no clue into the behavior pattern of P/E ratios, while other studies claim contradictory conclusion. This article reexamines the problem from perspectives of theories and empirical studies based on data from 2007 to 2017 in China's domestic stock markets. Behavior patterns of P/E ratios and earnings growth rates are interpreted and the risk factor is also incorporated in the analysis.

Copyright

© 2017, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Jingying Zhou
PY  - 2017/07
DA  - 2017/07
TI  - Earnings Growth Potential Implicit in Price-Earnings Ratio
BT  - Proceedings of the 2017 3rd International Conference on Economics, Social Science, Arts, Education and Management Engineering (ESSAEME 2017)
PB  - Atlantis Press
SN  - 2352-5398
UR  - https://doi.org/10.2991/essaeme-17.2017.26
DO  - 10.2991/essaeme-17.2017.26
ID  - Zhou2017/07
ER  -