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This article is written for folks that want to get higher at the usage of charge to income ratios (P/E ratios). To maintain it practical, we’ll display how Austevoll Seafood ASA’s (OB: AUSS) P/E ratio ought to assist you to assess the price on provide. Austevoll Seafood has a rate to profits ratio of 9.Ninety five, based at the closing 12 months. That is equal to an earnings yield of about 10%.
How Do I Calculate Austevoll Seafood’s Price To Earnings Ratio?
The method for P/E is:
Price to Earnings Ratio = Share Price ÷ Earnings in keeping with Share (EPS)
Or for Austevoll Seafood:
P/E of 9.Ninety five = NOK85.65 ÷ NOK8.Sixty-one (Based on the trailing twelve months to March 2019.)
Is A High Price-to-Earnings Ratio Good?
A better P/E ratio method that shoppers have to pay a better charge for every NOK1 the business enterprise has earned over the past year. That isn’t always an amazing or a terrible factor in line with se, but an excessive P/E does mean customers are optimistic approximately the destiny.
How Growth Rates Impact P/E Ratios
P/E ratios on the whole replicate marketplace expectancies round income boom prices. If earnings are growing quickly, then the ‘E’ within the equation will increase faster than it might otherwise. Therefore, even if you pay an excessive multiple of earnings now, that a couple of will become decrease within the destiny. So while a stock may additionally look highly-priced primarily based on past income, it can be reasonably-priced primarily based on future earnings.
Austevoll Seafood’s income according to proportion, has been pretty regular over the last 12 months. But it has grown its income in line with the percentage by way of sixteen% according to yr over the past five years.
How Does Austevoll Seafood’s P/E Ratio Compare To Its Peers?
The P/E ratio measures market expectations of an organization. The photograph under suggests that Austevoll Seafood has a lower P/E than the common (13.8) P/E for corporations in the meals industry.
Remember: P/E Ratios Don’t Consider The Balance Sheet
The ‘Price’ in P/E reflects the marketplace capitalization of the organization. Thus, the metric does now not replicate cash or debt held with the aid of the corporation. Hypothetically, a business enterprise ought to lessen its future P/E ratio with the aid of spending its cash (or taking up debt) to reap better income.
Spending on growth might be true or horrific a few years later, but the point is that the P/E ratio does not account for the option (or lack thereof).
How Does Austevoll Seafood’s Debt Impact Its P/E Ratio?
Austevoll Seafood has net debt worth 25% of its market capitalization. That’s sufficient debt to impact the P/E ratio a touch; so maintain it in thoughts if you’re comparing it to groups with out debt.
The Verdict On Austevoll Seafood’s P/E Ratio
Austevoll Seafood’s P/E is 9.9, which is below common (thirteen.4) in the NO market. The enterprise hasn’t stretched its stability sheet, and profits are improving. If you consider growth will continue – or even increase – then the low P/E might also symbolize possibility.
When the marketplace is incorrect approximately a stock, it offers savvy traders a possibility. If the truth for an enterprise is not as horrific as the P/E ratio indicates, then the percentage price ought lead to growth because the market realizes this. So this unfastened visualization of the analyst consensus on future income could help you make the proper choice approximately whether or not to buy, sell, or maintain.