DEF­I­NI­TION

Pretoria News Weekend - - OPINION -

Share val­u­a­tions: A share in a com­pany will be ex­pen­sive or cheap de­pend­ing to what ex­tent the share price re­flects the com­pany’s prof­itabil­ity and growth. This is most com­monly de­ter­mined by its price-toearn­ings (PE) ra­tio, the ra­tio of a com­pany’s share price to its prof­its (or earn­ings) per share. A re­lated in­di­ca­tor, the for­ward PE, is the share price against the com­pany’s ex­pected fu­ture earn­ings.

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