Price and Value: A Guide to Equity Market Valuation Metrics

© George Calhoun 2020

G. CalhounPrice and Valuehttps://doi.org/10.1007/978-1-4842-5552-0_6

6. Assessments and Qualifications

George Calhoun¹ 

(1)

Jersey City, NJ, USA

 

6.1 The Best Metric Today (2019): The P/E

The best and most consistent results for most valuation applications are (still) obtained from the traditional Price-to-Earnings Multiple.¹ It benefits from the immediacy, completeness, and actionable realism of the market component (“Price”), paired with the least problematic constituents of the company’s financial statements (income statement components like “Earnings” or “Cash Flow”). The P/E, in its several versions, triangulates the intrinsic value of the enterprise with greater effectiveness than Book, Model, or Market alone and is superior ...