Is there a standard P\E ratio that is good or does it depend on the industry of that company?

Question

So if it depends on the industry is there any way to find the industry standard or the classificati n of that industry?

Answer 1

P/E is a relative number that subject to industry and its own market. emerging market (China & India) or industry (Oil & Gas) with growth anticipation normally has high in P/E than others.

you can have industry standard P/E when you compare with other market (e.g. US market, Japan, & Europe).

Answer 2

The average P/E ratio of S&P 500 stocks is 18.
It depends upon your evaluation of the earnings. If you believe a company is expanding (in sales or profit margin) then a higher number is warranted. Starbucks is at about twice that number because it has announced it will increase the number of stores by more than double. A good home builder may have a P/E ratio in the single digits because industry home sales is expected to be down for the next few years.
It can depend on the industry but can also indicate a company being cautious or aggressive with their growth plans. Also remember there are few corporations that fit neatly into categories.
P/E ratios are relatively high now because money can be borrowed at reasonable rates. Some companies depend more on borrowed capital than others even in their own industry.

Answer 3

If the US Auto companies had built cars that got better gas mileage, they might be doing better. In fact, Homer was acting the way the Auto industry HAS been acting. Everything that sounded good they did, with no regards to what they were going to get in the end. Well, take a look at GM's product line last year, or the year before. I swear there's a "Homer" with a horn that plays "La Cucaracha." You can't blame Obama for that.

Answer 4

It depends on the industry.

Answer 5

P/E ratios are not a good way to identify a good stock...

however a low P/E should be better.

At the moment we have high P/Es and climbing markets..this tells you that stocks climb on emotion and not on P/Es.

Some resources below will help you create your own criteria
for selecting stocks and the scanning tool will cut to the chase.

See videos..."trade the triangle" link:

Answer 6

the lower the better. I do not rely simply on the P/E. However, for the average investor, it's alright.