What is a good P E ratio for ETFs? (2024)

What is a good P E ratio for ETFs?

Typically, the average P/E ratio is around 20 to 25. Anything below that would be considered a good price-to-earnings ratio, whereas anything above that would be a worse P/E ratio.

What is a good PE ratio for an ETF?

To give you some sense of what the average for the market is, though, many value investors would refer to 20 to 25 as the average P/E ratio range. And again, like golf, the lower the P/E ratio a company has, the better an investment the metric is saying it is.

Is 3.5 a good PE ratio?

There's no "good" P/E, but 10-20 is usually considered fairly valued. <10 is usually considered undervalued and >20 is usually considered overvalued, though it really depends on the industry. Compare the company to its industry peers to determine if its P/E is fair.

What is a favorable PE ratio?

As far as Nifty is concerned, it has traded in a PE range of 10 to 30 historically. Average PE of Nifty in the last 20 years was around 20. * So PEs below 20 may provide good investment opportunities; lower the PE below 20, more attractive the investment potential.

Is a 75 PE ratio good?

For example, if a company has been growing at 10% per year over the past five years but has a P/E ratio of 75, then conventional wisdom would say that the shares are expensive.

What is a good PE for S&P 500?

PE Ratio (TTM) for the S&P 500 was 28.93 as of 2024-03-21, according to GuruFocus. Historically, PE Ratio (TTM) for the S&P 500 reached a record high of 131.39 and a record low of 5.31, the median value is 17.88. Typical value range is from 19.79 to 28.11. The Year-Over-Year growth is 25.94%.

Do ETFs have a PE ratio?

As an individual stock has a P/E ratio, so do ETFs. A P/E ratio on an ETF is simply the weighted average P/E of the fund's holdings. Having a low P/E ratio is just the start for these unique value ETFs.

What is the safest PE ratio?

In simple terms, a good P/E ratio is lower than the average P/E ratio, which is between 20–25. When looking at the P/E ratio alone, the lower it is, the better. For new investors, “P/E” might as well mean “physical education.”

Is a PE ratio of 5 good?

Is 5 a good PE ratio? A P/E ratio of 5 could be considered good or bad depending on the industry and the company's growth prospects. For example, the industry average P/E for oil and gas companies is 6.3.

Can a PE ratio be too high?

Stocks with high price-to-earning (P/E) ratios can be overpriced. A stock trading at $40 per share with an EPS of $2 would have a P/E ratio of 20 ($40 divided by $2), as would a stock priced at $20 per share with an EPS of $1 ($20 divided by $1).

What is the average PE ratio for the S&P 500?

Basic Info

S&P 500 P/E Ratio is at a current level of 23.27, down from 24.59 last quarter and up from 19.17 one year ago. This is a change of -5.34% from last quarter and 21.43% from one year ago. The S&P 500 PE Ratio is the price to earnings ratio of the constituents of the S&P 500.

Do I want a high or low PE ratio?

Many investors say buying shares in companies with a lower P/E ratio is better because you are paying less for every dollar of earnings. A lower P/E ratio is like a lower price tag, making it attractive to investors looking for a bargain.

Why is Amazon PE ratio so high?

34 One of the reasons Amazon's P/E is so much higher than Apple's is that its efforts to expand aggressively on a wide scale have helped keep earnings somewhat suppressed and the P/E ratio high. The P/E ratio should be used with a variety of other analysis tools to analyze a stock.

What is the PE ratio for an intelligent investor?

Invest in companies with price to earnings per share (P/E) ratios of 9.0 or less. Look for companies that are selling at bargain prices. Finding companies with low P/Es usually eliminates high-growth companies, which should be evaluated using growth investing techniques.

What is the rule of thumb for PE ratio?

Price Earnings (P/E) ratio is one of the most popular ways of valuing a stock. The thumb rule is that a low P/E ratio is a sign of undervaluation while a high P/E ratio is a sign of overvaluation.

What is the PE ratio of Berkshire Hathaway?

Berkshire Hathaway's Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Dec. 2023 was $44.21. Therefore, Berkshire Hathaway's PE Ratio for today is 9.41. During the past 13 years, the highest PE Ratio of Berkshire Hathaway was 129.98.

What is the Nasdaq PE ratio?

The PE ratio for Nasdaq stock stands at 29.35 as of Mar 22, 2024. This is based on the current EPS of $2.1 and the stock price of $61.63 per share.

What industry has the lowest PE ratio?

Is the S&P 500 overvalued?

An analysis by Ned Davis Research showed that the S&P 500 is more than 5% "overvalued," when adjusted for how the index's P/E ratio has trended since 1964. However, the index is "far from bubble territory," the firm said.

How do you know if an ETF is overvalued?

Evaluate the ETF's Premium or Discount

If the ETF is trading at a premium, it could indicate that the ETF is overvalued. If it's trading at a discount, it could indicate that the ETF is undervalued.

What are ratios for ETFs?

The Average ETF Expense Ratio Is Lower Than Mutual Funds

The average expense ratio for index ETFs is typically lower than that of index mutual funds, historically 0.57% for ETFs versus 0.84% for mutual funds. Importantly, the higher costs of mutual funds can add up and impact portfolio returns over the long run.

How do you calculate PE ratio of an ETF?

Components of P/E ratio

The P/E for a stock is computed by dividing the price of a stock (the "P") by the company's annual earnings per share (the "E"). If a stock is trading at $20 per share and its earnings per share are $1, then the stock has a P/E of 20 ($20/$1).

Why is PE ratio flawed?

The biggest limitation of the P/E ratio: It tells investors next to nothing about the company's EPS growth prospects. If the company is growing quickly, you will be comfortable buying it even it had a high P/E ratio, knowing that growth in EPS will bring the P/E back down to a lower level.

Why is PE ratio bad?

A high P/E typically means a stock's price is high relative to earnings. A low P/E indicates a stock's price is low compared to earnings and the company may be losing money. A consistently negative P/E ratio run the risk of bankruptcy.

Is a PE ratio of 30 good or bad?

A P/E of 30 is high by historical stock market standards. This type of valuation is usually placed on only the fastest-growing companies by investors in the company's early stages of growth. Once a company becomes more mature, it will grow more slowly and the P/E tends to decline.