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Author: KurtNYC Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 27456  
Subject: P/E calculations and confusion Date: 12/17/2009 6:43 PM
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Hello,

I am having some confusion as to why the p/e of a stock varies so much from site to site. A small difference makes sense, but take this stock I own as an example.

YONG as of 12/17 at $7.55

here at MF p/e 14.2 (http://caps.fool.com/Ticker/YONG.aspx)
Google p/e 79.43 (http://www.google.com/finance?q=NASDAQ%3AYONG)
Yahoo p/e 171.59 (http://finance.yahoo.com/q?s=YONG)

I get there are different ways to calculate this, but the example seems beyond that. My understanding is these are not forward p/e's but perhaps some are and are not listed as such.

thanks, kurt
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Author: mjs111 Big red star, 1000 posts Feste Award Nominee! Old School Fool Coverage Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 23040 of 27456
Subject: Re: P/E calculations and confusion Date: 12/17/2009 8:29 PM
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kurt,

There are different ways to calculate PE ratios. You can use a forward earning estimate, you can use the trailing twelve months' worth of earnings, or you could use the current earnings (such as earnings from the latest quarter and annualize them).

Yahoo uses trailing twelve months' earnings in their PE ratios (that's what the "ttm" stands for next to the PE ratio that's listed). I'm not sure offhand what Google uses. Motley Fool uses ttm as well.

The thing with YONG is that the current ttm earnings are negative. In this case, the PE ratio is actually undefined. Different sites might try and do different things when the PE ratio is negative, but it really is a meaningless number.

What I do in cases like this is to construct normalized earnings and see what it would take for the company to get to those normalized earnings.


Mike

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Author: jackcrow Big gold star, 5000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 23042 of 27456
Subject: Re: P/E calculations and confusion Date: 12/17/2009 9:55 PM
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Kurt,

I find it is usually better to craft most of my own metrics. The public sites are nice for quick hacks and down an dirty quick run threws. Take trailing 12 earnings from the actual published statements and the current price and P/E them. The really nice thing about this is if we know a company well and/or we have a different idea what "real earnings" are we can craft a number that better suits us.

LOL I just looked at Yahoo for this company earnings .04, price 7.55, p/e 171.59, the funny thing was "Forward PE = 6.8" Someone can check my math but that is more like $1.10 annual earnings a massive pop in earnings. If we scratch further we see trailing twelve of $.77, If we use that as our "e" then we get 7.55/.77 = 9.8.

$.77 to $1.10 would still be a nice pop if P/E stays stable but no where near the same kind of pop as $.04 to $1.10 is.

make sense

jack

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Author: KurtNYC Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 23044 of 27456
Subject: Re: P/E calculations and confusion Date: 12/18/2009 10:25 AM
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Thanks Mike and Jack!

I knew it didn't all make sense. Thanks for the info on what Yahoo and TMF are, and ideas on how to run the numbers myself when they don't make sense. I have been at this less than a year and I am constantly learning how little I know.

best - kurt

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