Wall Street’s favorite valuation metric … the P/E ratio based on 12-month forward earnings.
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The bulls cry foul …
Earnings over the next year are wrecked because of CV19. So, invent a new metric, the P/E ratio looking ahead 2 or 3-years.
Using 3-year forward earnings estimates, that is, June 2022 to June 2023, still over 21. Not cheap!
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Earnings over the next year are wrecked because of CV19. So, invent a new metric, the P/E ratio looking ahead 2 or 3-years.
Using 3-year forward earnings estimates, that is, June 2022 to June 2023, still over 21. Not cheap!
(2/3)
This shows error rate of 3-yr forward earnings. The green bars (bottom) = estimates are too high, often by as much as 100% when coming out of a recession (now).
Not only are you paying 21 for 3-yr forward earnings, history says they can be way too optimistic as well.
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Not only are you paying 21 for 3-yr forward earnings, history says they can be way too optimistic as well.
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