Hi Preston, just wanted to add a deeply felt note of thanks. i been watching your videos for 4 hours straight . ur videos are great , helped me gain a lot of understanding regarding basics of shares and financial statements. ur life saver . keep up the great stuff! u rock !! - J
Just one word to explain ur tutorials.. "AWESOME".. gr8 work preston. I can't imagine how many hours it might hv taken, to create videos with such perfection, compiling information from every corner n yet explaining it in the simplest possible way.. hats off to u man.
I am 14 years old, and I want to learn to be a good value investor. I can't thank you enough how much I appreciate your videos, they really help me understand the basics and get started
surprised this came out 8 years ago!! and still relevant and sooo useful today! wow. missed out a lot! this was the best explanatory video I've ever watched!
Hey I'm 20 and your playlist helped me a lot you know. I've learned so much and I'm gonna go open my Dmat account and calculate my way through carefully and not thread much on the failure, which there will be surely.
+5:19-5:20 You state that you don't really want to know what the company was worth a year ago you want to know what the company is worth now; however, in "The Intelligent Investor" It says you don't want the recent eps when calculating P/E you want the 3 year average EPS because it more accurately tells you what the company is worth due to a good year temporarily increasing the actual value of a company.
EPS is most often derived from the last four quarters. This form of the price-earnings ratio is called trailing P/E, which may be calculated by subtracting a company’s share value at the beginning of the 12-month period from its value at the period’s end, adjusting for stock splits if there have been any. Sometimes, price-earnings can also be taken from analysts’ estimates of earnings expected during the next four quarters. This form of price-earnings is also called projected or forward P/E. A third, less common variation uses the sum of the last two actual quarters and the estimates of the next two quarters. Conclusion: There are many ways to calculate your EPS based on what you believe is most accurate for what you want to know. Read more: Price-Earnings Ratio - P/E Ratio Definition | Investopedia www.investopedia.com/terms/p/price-earningsratio.asp#ixzz4OeRe8jFA Follow us: Investopedia on Facebook
With your example it would look like this: 1-year EPS calculated: 20.000 Net Income / 10.000 Shares Outstanding = 2$ Earnings Per Share 3-year average EPS calculated: 2 years ago: 17.000 Net Income / 10.000 Shares Outstanding = 1.7$ Earnings Per Share 1 year ago: 22.000 Net Income / 10.000 Shares Outstanding = 2.2$ Earnings Per Share This year: 20.000 Net Income / 10.000 Shares Outstanding = 2.0$ Earnings Per Share Total Sum = 5.9$ 3-year average EPS = 5.9 / 3 years = 1.96$ average EPS over last 3 years
P/E Ratio Calculation: How to calculate it: Market Price per share / 3-year average EPS = P/E ratio 10 / 1.96 = 5.10 Why is the P/E Ratio important? Explaination: “For every (insert your P/E ratio) 5.10 dollars i spend buying this stock, i should receive 1 dollar in profit per year.” Scale for P/E ratio: How to calculate it: 1 dollar / 3-year average EPS = 0.1960 = 19.60% P/E = 25 - Return 4% P/E = 20 - Return 5% P/E = 15 - Return 6.6% P/E = 10 - Return 10% P/E = 5.10 - Return 19.60% P/E = 5 - Return 20% Conclusion: It means the lower the P/E ratio, the higher the return on the investment. In this example investment it would take just over 5 years to get the initial investment back because the annual return is 19.60%.
For a long time I did not knew how to read a Balance sheet .. but today I learnt to glance thru balance sheet for valuable information thank you so much
4 videos lessons (so far) and this practical video help me to understand my financial accounting and business management courses that it was written in "Chinese" to me. Why they don't teach this simple way in college.. Thank you for making this videos!! Now everything makes senses to me.. thumbs up!!!
I think this is the best video I've watched on youtube in a long time. All the other videos is just about day trading flipping price of shares. I wanted to actually read a financial statement like this video did. Breaking it down number by number determine if it's undervalue or overvalued, worth investing long term such as dividend earnings. I thank you so much.
I want to thank you so much. I want to start investing, but I did not even know what is a good or a bad investment, i do not know anything about businesses. I just started watching your videos yesterday and I am understanding a lot. What you said last video about thinking about only 1 share as if it was a whole company helped me a lot with the numbers and the understanding of all of this.
Thanks Preston. This is the best lesson I've found all over the net and the perfect answer for the question-How to value a stock? Is it worth the current price? I'm look forward to more lessons from you..
Great info, better late than never! Just got your book today and I’m already learning so much. Thank you for your hard work and dedication to teaching this!
Mr.Pysh hope you are doing good could you help me clarify this please , for the Price to earnings phrase , what does that suppose to mean ? i mean if you spend X amount after you get the P/E , how can I know or how can i determine where is the 1 dollar return on this ? hope you get my point sir :)
Mr. Pysh, quick question about Margin of Safety: What would be the best way to know the percentage on Margin of Safety on this J&J ticker? I calculated Margin of Safety rate taking Earning/Share $3.48 and dividing it by Market Price $64.22 which came with 5.41 or 500.41%? I would appreciate if you help me out to understand this clearly. Thank you!
Hey Preston thank you for all these videos, it help my understand smart investing more. I have a hard time understanding "Total Liabilities & Shareholder's Equity," I'm sure its obvious but isnt it just the sum of liability and what the company owes to the share holder if they were to close up.
Hi Preston, would you mind to show an updated exercise with the latest website layout? I have a difficult time finding all the terms from morningstar website. Thanks alot!
So when we are talking about P/E ratio, is that factored into the actual stock price going up. For example if there was a P/E ratio of $10 then I could expect $1 for every $10 per year. Does that mean on a stock that was $10 should be valued at $11 the next year or where does that value actually appear?
It means that if you invested $10 into that company you can expect $1 of earnings as yearly returns. So next year your invested amount would have increased by 1$ !
Hi Preston! you have fantastic channel and website.Best educative channel ever, with endless content, very understandable and simplied with high quality and many more!!! Thank you very much! I wish I could say that in person! it's a fantastic work. cheers!
Thank you! this was very helpful. For some reason I don't have the same view when I open MSN Money as you do. Everything on the left pane where the three financial statements are etc, I am not seeing. This is after entering to sticker information. Thanks
Thank you sir. After an exhaustive search on the net trying to figure out how to make sense of the stock market I think I've finally found the answer! Great great videos. Thank you for sharing this to the world! Just a quick question, I've looked at Tesla's figures just after watching this video and found its P/E ratio is -65.30. What would it mean if its a minus? For every $65 I spend buying this stock, I will lose $1 a year later?
hey Preston, when i work out the PE i put my end number into that sentence "for every __dollars i spend buying this stock, i should receive 1 dollar in profit a year". So when i look at say JNJ now the Market Price is 109.60 and the EPS is 5.48 my PE = 20 like it says on the financial. So my sentence should be "for every 20 dollars i spend buying this stock, i should receive 1 dollar in profit a year. ? So if i were to invest lets say $1000 into this stock i would divide 1000/20 = 50. so i would receive $50 per year on this investments. So then i work out that my $50 is 5% a year interest on my 1000... but then on summary it has dividend rate (yield) 3.00 2.74% ... so I'm guessing i gain 2.74% on my stock not the 5%... ?
The five percent that you get is not going into your hands but is actually reflected in the share price because the profits are reinvested back into the business. The 2.74 percent dividends is directly coming into your pockets and not reflected in the share price. So your total return would be 7.4% if you re invest the dividend back!!
I saw that the total shares outstanding was changing year by year. Why is that? And based on what is it determined that how many pieces a company is gonna be divided into?
great job! Thank you for amazing lessons! Although I'm fairly familiar with financial statements and ratios, I started watching your lessons from the beginning and I'm learning some of the strong fundamentals! Thanks again!
Right here guys. This is something that you pay hundreds of thousands of dollars in schools and still don't quite understand what's going on. Thank you so much for this Video ❤️❤️
It actually signifies a good return but it can also be a value trap. So research why the stock prices below its book value because it may be a problem in its business model or it may be just sentiments !
hey there this video was really helpful and I wanted to ask if you could update it because this website has changed a lot since the video was made and those details more difficult for me to find at least on the site.
Hi , @PrestonPsyh you told the meaning of EPS is for every 5 dollars I spent I will get 1 dollar in profit for one year, this means will the company pay me 1 dollar or my stock value will raise in 1 dollar , Please clarify
murali satya krishna the way I understood it is that’s P/E ratio. If P/E ratio is 5. Every $5 you invest in stock you will get $1 back in earnings. So every $18.40 you invest in stock you would get $1 back in earnings at end of year.
A much better valuation metric is the EV/FCF ratio - a low P/E ratio company isn't necessarily cheap, because if their CAPEX and debt repayments are through the roof, we as shareholders never get paid - this effectively defeats the purpose of investing, which is to get more money out than we put in and not have it going to the bank!
I'm trying to calculate the book value per share of Shimano, on Yahoo Finance it says its 4.40 but when I calculate 449.014M/92,7M I get 4.620 instead of 4.40 as a result? This miscalculation only happens with Shimano and not JNJ? finance.yahoo.com/quote/SMNNY/key-statistics?p=SMNNY&.tsrc=fin-srch
What does it mean when on a companies income statement it says 13 week period and 26 week period and i have a different net income under both? Which one should I be looking at?
Preston Pysh awesome set of videos I have really learned a lot. Please update this video. MSN Money has really changed in the last 4+ years and it is very hard to follow along, Thanks
I used morningstar.com, however it has a column which says TTM rather than just the year in the income statement. So should we take this into consideration to know the current net income of the company? And I could see that TTM is missing from the balance sheet.
i am still having some trouble, what is the equation to figure the book value? as of right now, May 14, 2019, I am taking JNJ as the example, as from what I understand you take the shares outstanding (2,6555,056,000) and divide that by the Total Equity(58,955,000) and I am getting the number $45.04, but when I look for the book value on sinkorswim (tdameritrade) it says it is only $22.44 . Am I doing something wrong? Please tell me you are still getting these notifications after 7 years! and help me!! these videos are so extraordinarily helpful, I have been taking notes on every single one, but I feel stuck here and don't want to progress until I fully understand.
Are you sure you took to right numbers because they look wrong... because the book value is total equity divided by total number of outstanding shares. Not the other way around!!
So when I would divide the market price of one share with the P/E and then take the result of that and divide the EPS with it. If then the number is higher then 1 I would know that I get 1$ for every P/E, right? Thank you for helping me out here, your videos are awesome
The Morningstar website uses a different terminology than what is used in these EXCELLENT videos. Can somebody please help with a website that is good quality and uses this terminology in 2018? @Preston Pysh Many many thanks for these excellent videos!
Yes, right now Tesla has one but I don't understand how it works when the P/E is negative. Master Preston could you help me by providing a answer for this question?
Is there a way of telling how many shares outstanding exchanged hands in any given period? For example, a company may have 1 million shares outstanding. However, 120,000 of those shares (as an example) on average were bought/sold during X time frame. Where would I find that 120,000 figure at? Btw, I love the videos so far.
The reason the book value is in negative that the liabilities have exceeded the assets ... People want to buy on the hope that the company would recover its assets once the situation turns to normal.
I like the concept of margin of safty given by the book value. Unfortunatly, i realised on my own as an investors that the book value is fake because of the goodwill listed on the balance sheet, wich is pure air. The value of goodwill is given by the earnings power of the company. When the earnings drops, so does the goodwill value on the balance sheet. Goodwill doesnt protect your capital at all, absolutly not. Equity-goodwill/shares outstanding/share price is the real margin of safety that do protect the principal.
EPS is earnings per share which is proportionate to the net income of the company. So you look at the EPS and multiply it with total shares oustanding and you get the given company's clear profit after taxes and after paying the cost of revenue. So why is this important? Because you can see how much money the company produces per share.
People reject learning and despise the sight of new ideas sometimes. But despite people who neglect these learning tools, there is less competition for us :)
Impressive work, Preston. I am gonna buy your book from kindle.I am sure, Its definitely gonna be worth buying and it would be a little contribution to your fantastic work.
Does a higher P/E value always mean the company is overvalued? Could it also mean the stock is performing better or at least the market thinks it is going to do well?
Higher PE signifies that people are optimistic about the companies performance in the future. Research about the company's future prospect to justify whether the company deserves the higher PE or it is just pure over valuation!!
hey man! i am new at investing.was checking out a company called jk tyre's income statement.and found that even earnings increased but EPS and book value just decreased to 50 %.HOW??????
are these courses applicable everywhere like in my country philippines? is difference between your market and our? thanks preston ihave learned a lot from you but i haven't started investing yet because i think my knowledge is very poor at the momment. any advise advise for me investing in philippine stock market would be appriciated. thanks again
Could you go over a stock on morning star because the stocks are analyzed differently thank you for the videos again if u can't ill just search it up on utube or something. :D
The basic essence of the price to earnings ratio is to calculate how much you have to invest in order to earn $1. So PE ratio of 18 says that you have to invest $18 for earning every one dollar!
Wow! You have explained it so well. Allow may to say if I understand it right, is that JNJ is overpriced? Bear with me, I just want to learn and to clarify if I truly understand the video. I don't care if someone laughs at my comments. No offend because I don't know anything about investing.
this man is literally an a-z tutorial on how to be a great teacher. Bitesize chunks with visual examples all in 20 mins or less. Truly a masterclass!
Dear Mr Pysh,
You have taught me more in the last one hour than what I have been trying to learn myself in the last few months. Thank you so much.
I can vouch for that. Your a damn good teacher
Hi Preston, just wanted to add a deeply felt note of thanks. i been watching your videos for 4 hours straight . ur videos are great , helped me gain a lot of understanding regarding basics of shares and financial statements. ur life saver . keep up the great stuff! u rock !!
- J
this is exactly how i am spending my quarantine. educating myself and learning. thank you so so much for such great video. God bless
lol me too
@@amaraturner5764
me 3!
@@rainbowboi5110 me 4!?
Me 5!!😂
Me 6... and awaiting for me 7 :-)
Just one word to explain ur tutorials.. "AWESOME".. gr8 work preston. I can't imagine how many hours it might hv taken, to create videos with such perfection, compiling information from every corner n yet explaining it in the simplest possible way.. hats off to u man.
I am 14 years old, and I want to learn to be a good value investor. I can't thank you enough how much I appreciate your videos, they really help me understand the basics and get started
NOSHIN RAHMAN i wonder how you are today as an 18 year old
19 now
@@c.marquez8821 20 now
@@anthonydelfosse3761 curious how he did
How you doing bro?
probably most useful channel on YT for me
I've been taking notes every lesson and getting smarter every step of the way. great videos and teaching method.
these videos are so unbelievably helpful, I can't believe there are not thousands of views
surprised this came out 8 years ago!! and still relevant and sooo useful today! wow. missed out a lot! this was the best explanatory video I've ever watched!
Some concepts are timeless!!
Hey I'm 20 and your playlist helped me a lot you know. I've learned so much and I'm gonna go open my Dmat account and calculate my way through carefully and not thread much on the failure, which there will be surely.
How has that been going if yu don’t mind me asking
You've broken these down concepts in to very digestible nuggets of information. Best material on RUclips!
+5:19-5:20
You state that you don't really want to know what the company was worth a year ago you want to know what the company is worth now; however, in "The Intelligent Investor" It says you don't want the recent eps when calculating P/E you want the 3 year average EPS because it more accurately tells you what the company is worth due to a good year temporarily increasing the actual value of a company.
interesting
EPS is most often derived from the last four quarters. This form of the price-earnings ratio is called trailing P/E, which may be calculated by subtracting a company’s share value at the beginning of the 12-month period from its value at the period’s end, adjusting for stock splits if there have been any. Sometimes, price-earnings can also be taken from analysts’ estimates of earnings expected during the next four quarters. This form of price-earnings is also called projected or forward P/E. A third, less common variation uses the sum of the last two actual quarters and the estimates of the next two quarters.
Conclusion: There are many ways to calculate your EPS based on what you believe is most accurate for what you want to know.
Read more: Price-Earnings Ratio - P/E Ratio Definition | Investopedia www.investopedia.com/terms/p/price-earningsratio.asp#ixzz4OeRe8jFA
Follow us: Investopedia on Facebook
With your example it would look like this:
1-year EPS calculated:
20.000 Net Income / 10.000 Shares Outstanding = 2$ Earnings Per Share
3-year average EPS calculated:
2 years ago: 17.000 Net Income / 10.000 Shares Outstanding = 1.7$ Earnings Per Share
1 year ago: 22.000 Net Income / 10.000 Shares Outstanding = 2.2$ Earnings Per Share
This year: 20.000 Net Income / 10.000 Shares Outstanding = 2.0$ Earnings Per Share
Total Sum = 5.9$
3-year average EPS = 5.9 / 3 years = 1.96$ average EPS over last 3 years
P/E Ratio Calculation:
How to calculate it: Market Price per share / 3-year average EPS = P/E ratio
10 / 1.96 = 5.10
Why is the P/E Ratio important?
Explaination:
“For every (insert your P/E ratio) 5.10 dollars i spend buying this stock, i should receive 1 dollar in profit per year.”
Scale for P/E ratio:
How to calculate it: 1 dollar / 3-year average EPS = 0.1960 = 19.60%
P/E = 25 - Return 4%
P/E = 20 - Return 5%
P/E = 15 - Return 6.6%
P/E = 10 - Return 10%
P/E = 5.10 - Return 19.60%
P/E = 5 - Return 20%
Conclusion: It means the lower the P/E ratio, the higher the return on the investment. In this example investment it would take just over 5 years to get the initial investment back because the annual return is 19.60%.
yeah but I think it's for the Growth stocks, not for companies like JNJ where its stable ..
For a long time I did not knew how to read a Balance sheet .. but today I learnt to glance thru balance sheet for valuable information thank you so much
4 videos lessons (so far) and this practical video help me to understand my financial accounting and business management courses that it was written in "Chinese" to me. Why they don't teach this simple way in college.. Thank you for making this videos!! Now everything makes senses to me.. thumbs up!!!
I think this is the best video I've watched on youtube in a long time. All the other videos is just about day trading flipping price of shares. I wanted to actually read a financial statement like this video did. Breaking it down number by number determine if it's undervalue or overvalued, worth investing long term such as dividend earnings. I thank you so much.
I want to thank you so much. I want to start investing, but I did not even know what is a good or a bad investment, i do not know anything about businesses. I just started watching your videos yesterday and I am understanding a lot. What you said last video about thinking about only 1 share as if it was a whole company helped me a lot with the numbers and the understanding of all of this.
This is the best thing on RUclips. Thanks a ton Preston.
Im just here to say thanks man...like seriously you are all about educating people and I love it....
Even my high school teachers cudnt teach me finance so well! Tysm ur doing a great job!
Thanks Preston. This is the best lesson I've found all over the net and the perfect answer for the question-How to value a stock? Is it worth the current price?
I'm look forward to more lessons from you..
thank you preston for such great work, you make it easy to comprehend.
This channel cannot be unliked
Best lesson ever received on RUclips ! Thank you so much !
In 2020, where can i find the market price for each share in order to calculate P/E and P/BV?
Great info, better late than never! Just got your book today and I’m already learning so much. Thank you for your hard work and dedication to teaching this!
Mr.Pysh
hope you are doing good
could you help me clarify this please , for the Price to earnings phrase , what does that suppose to mean ? i mean if you spend X amount after you get the P/E , how can I know or how can i determine where is the 1 dollar return on this ? hope you get my point sir :)
Omg in 1 day I am able to understand lots of things in finance markets. WONDERFUL!!!!!!!!!!
These are the best videos that i have come across. Thanks
your videos are the best and most informative videos i have ever watched on youtube!
Mr. Pysh, quick question about Margin of Safety:
What would be the best way to know the percentage on Margin of Safety on this J&J ticker? I calculated Margin of Safety rate taking Earning/Share $3.48 and dividing it by Market Price $64.22 which came with 5.41 or 500.41%? I would appreciate if you help me out to understand this clearly. Thank you!
he used different term in the next video, correct me if i m wrong, ; net income=profit? total equity=book value?
Correct, watch the previous vid.
Hey Preston thank you for all these videos, it help my understand smart investing more. I have a hard time understanding "Total Liabilities & Shareholder's Equity," I'm sure its obvious but isnt it just the sum of liability and what the company owes to the share holder if they were to close up.
Hi Preston, would you mind to show an updated exercise with the latest website layout? I have a difficult time finding all the terms from morningstar website. Thanks alot!
Is it smart to buy a stock that is currently trading under book value?
So when we are talking about P/E ratio, is that factored into the actual stock price going up. For example if there was a P/E ratio of $10 then I could expect $1 for every $10 per year. Does that mean on a stock that was $10 should be valued at $11 the next year or where does that value actually appear?
It means that if you invested $10 into that company you can expect $1 of earnings as yearly returns. So next year your invested amount would have increased by 1$ !
Great video. Your uploads are a great source of valuable information to all. Appreciate your time and effort
Hi Preston! you have fantastic channel and website.Best educative channel ever, with endless content, very understandable and simplied with high quality and many more!!! Thank you very much! I wish I could say that in person! it's a fantastic work.
cheers!
Some teachers are too good and some concepts are timeless !!
What is the equation for Margin of Safety?
Can I ask how the value number you calculated compares to the Graham number? And should both be good before investigated on a stock further?
Thank you! this was very helpful. For some reason I don't have the same view when I open MSN Money as you do. Everything on the left pane where the three financial statements are etc, I am not seeing. This is after entering to sticker information. Thanks
Felix Felsmann thank you very much
Thank you sir. After an exhaustive search on the net trying to figure out how to make sense of the stock market I think I've finally found the answer! Great great videos. Thank you for sharing this to the world!
Just a quick question, I've looked at Tesla's figures just after watching this video and found its P/E ratio is -65.30. What would it mean if its a minus? For every $65 I spend buying this stock, I will lose $1 a year later?
Can you trust the numbers coming from the company. how often do they cook the numbers
4:00 '...rough year with 9 Billion Dollars.' Man, I wish I was having a rough year with only 9 Billion Dollars.
hey Preston, when i work out the PE i put my end number into that sentence "for every __dollars i spend buying this stock, i should receive 1 dollar in profit a year". So when i look at say JNJ now the Market Price is 109.60 and the EPS is 5.48 my PE = 20 like it says on the financial. So my sentence should be "for every 20 dollars i spend buying this stock, i should receive 1 dollar in profit a year. ? So if i were to invest lets say $1000 into this stock i would divide 1000/20 = 50. so i would receive $50 per year on this investments. So then i work out that my $50 is 5% a year interest on my 1000... but then on summary it has dividend rate (yield) 3.00 2.74% ... so I'm guessing i gain 2.74% on my stock not the 5%... ?
The five percent that you get is not going into your hands but is actually reflected in the share price because the profits are reinvested back into the business. The 2.74 percent dividends is directly coming into your pockets and not reflected in the share price. So your total return would be 7.4% if you re invest the dividend back!!
Good question by the way
Hi, what if the EPS we calculated differs from that which is listed on the website?
Note: I did not use JNJ, I used DFS for my examlpe
Thank You Sir! I love watching your videos. Its crystal clear.
I saw that the total shares outstanding was changing year by year. Why is that? And based on what is it determined that how many pieces a company is gonna be divided into?
i was following your steps and i found ordinary shares outstanding instead of preferred or common shares outstanding what is that supposed to mean???
What about if the P/BV * P/E ends up being negative?
great job! Thank you for amazing lessons! Although I'm fairly familiar with financial statements and ratios, I started watching your lessons from the beginning and I'm learning some of the strong fundamentals! Thanks again!
Right here guys. This is something that you pay hundreds of thousands of dollars in schools and still don't quite understand what's going on. Thank you so much for this Video ❤️❤️
Great preston...am still buying stocks without knowing nada...your video explains a lot, especially the JNJ is topnotch..awsome...
Ever thought about publishing a news letter on different stock picks and selling it for a monthly fee
Could I think of the book value as the absolute minimum value of the share since it the value of the stock if it died.
is that mean if market price are lower then book value, i might have decent return?
It actually signifies a good return but it can also be a value trap. So research why the stock prices below its book value because it may be a problem in its business model or it may be just sentiments !
@@imlkr_ Thank you !:)
what if no p/e is listed? ive ran into alot of otc stocks with no p/e listed. what does that mean?
The best youtube channel ever!! Thank you sir
Wow! that was explained so clearly. Following the videos with your fantastic book. Thanks a ton!
Thank you so much for your lessons I've been looking literally everywhere online and this is exactly what I needed . Thank you :)
hey there this video was really helpful and I wanted to ask if you could update it because this website has changed a lot since the video was made and those details more difficult for me to find at least on the site.
Hi , @PrestonPsyh you told the meaning of EPS is for every 5 dollars I spent I will get 1 dollar in profit for one year, this means will the company pay me 1 dollar or my stock value will raise in 1 dollar , Please clarify
murali satya krishna the way I understood it is that’s P/E ratio. If P/E ratio is 5. Every $5 you invest in stock you will get $1 back in earnings. So every $18.40 you invest in stock you would get $1 back in earnings at end of year.
what an amazing teacher you are sir
YOU ARE AMAZING!
THANKS SO MUCH! I wish they taught some of these basics in school instead of wasting our time
This is amazing! you provide the best learning experience on RUclips!
A much better valuation metric is the EV/FCF ratio - a low P/E ratio company isn't necessarily cheap, because if their CAPEX and debt repayments are through the roof, we as shareholders never get paid - this effectively defeats the purpose of investing, which is to get more money out than we put in and not have it going to the bank!
I'm trying to calculate the book value per share of Shimano, on Yahoo Finance it says its 4.40 but when I calculate 449.014M/92,7M I get 4.620 instead of 4.40 as a result? This miscalculation only happens with Shimano and not JNJ? finance.yahoo.com/quote/SMNNY/key-statistics?p=SMNNY&.tsrc=fin-srch
Also, how do you calculate the P/BV if the net income is in the negative?
What does it mean when on a companies income statement it says 13 week period and 26 week period and i have a different net income under both? Which one should I be looking at?
I cant believe how good your videos are... I am in pain.
Preston Pysh awesome set of videos I have really learned a lot. Please update this video. MSN Money has really changed in the last 4+ years and it is very hard to follow along, Thanks
I watched this video just to confirmy my understanding and OMG! I have so much understanding now. Going to be unstoppable now :D
I used morningstar.com, however it has a column which says TTM rather than just the year in the income statement. So should we take this into consideration to know the current net income of the company? And I could see that TTM is missing from the balance sheet.
TTM is nothing but the "trailing twelve month" net income of the company. But it is advisable to look at the past 5 years net income too!
Thanks Preston, great content mate! Much appreciated for doing all these lessons
i am still having some trouble, what is the equation to figure the book value? as of right now, May 14, 2019, I am taking JNJ as the example, as from what I understand you take the shares outstanding (2,6555,056,000) and divide that by the Total Equity(58,955,000) and I am getting the number $45.04, but when I look for the book value on sinkorswim (tdameritrade) it says it is only $22.44 . Am I doing something wrong? Please tell me you are still getting these notifications after 7 years! and help me!! these videos are so extraordinarily helpful, I have been taking notes on every single one, but I feel stuck here and don't want to progress until I fully understand.
Are you sure you took to right numbers because they look wrong... because the book value is total equity divided by total number of outstanding shares. Not the other way around!!
Do I understand it right that you just have to look if the EPS is above 1$ and then you know that you are getting atleast 1$ for every P/E?
So when I would divide the market price of one share with the P/E and then take the result of that and divide the EPS with it. If then the number is higher then 1 I would know that I get 1$ for every P/E, right?
Thank you for helping me out here, your videos are awesome
Figured it allready out
is there a case when the market price happens to be lower than the book value per share? if so,, what does it mean? great vid by the wayy
can you update the finance site please?, MSN really sucks today
The Morningstar website uses a different terminology than what is used in these EXCELLENT videos. Can somebody please help with a website that is good quality and uses this terminology in 2018? @Preston Pysh Many many thanks for these excellent videos!
Also, what about the P/E ratio, if the EPS is negative can a stock actually have a negative number to one ratio. (Ex. -55:1)?
Yes, right now Tesla has one but I don't understand how it works when the P/E is negative. Master Preston could you help me by providing a answer for this question?
Is there a way of telling how many shares outstanding exchanged hands in any given period? For example, a company may have 1 million shares outstanding. However, 120,000 of those shares (as an example) on average were bought/sold during X time frame. Where would I find that 120,000 figure at?
Btw, I love the videos so far.
For Boeing right now the book value is -15.31 compare to market price 124.52, but everyone wants to buy?
The reason the book value is in negative that the liabilities have exceeded the assets ... People want to buy on the hope that the company would recover its assets once the situation turns to normal.
I'm confused about the millions /billions part. You say that its valued in millions but then call everything billions. please help.
I'm from Russia Moscow. This video is very good. Thank you so much Preston!
I like the concept of margin of safty given by the book value. Unfortunatly, i realised on my own as an investors that the book value is fake because of the goodwill listed on the balance sheet, wich is pure air. The value of goodwill is given by the earnings power of the company. When the earnings drops, so does the goodwill value on the balance sheet. Goodwill doesnt protect your capital at all, absolutly not. Equity-goodwill/shares outstanding/share price is the real margin of safety that do protect the principal.
Could someone explain, why EPS is important?
EPS is earnings per share which is proportionate to the net income of the company. So you look at the EPS and multiply it with total shares oustanding and you get the given company's clear profit after taxes and after paying the cost of revenue. So why is this important? Because you can see how much money the company produces per share.
I have a problem finding the financials, like the income statment etc. for any businesses out there.. anyone know of a good page to find this ?
If you have a platform you use to do your investing with it will hold the documents im sure.. Find a good platform online.
People reject learning and despise the sight of new ideas sometimes. But despite people who neglect these learning tools, there is less competition for us :)
DUDE!!! your videos are invaluable! Thank you man
so whats the difference between eps and p/e ??
eps x stock price = p/e ratio
Impressive work, Preston. I am gonna buy your book from kindle.I am sure, Its definitely gonna be worth buying and it would be a little contribution to your fantastic work.
Does a higher P/E value always mean the company is overvalued? Could it also mean the stock is performing better or at least the market thinks it is going to do well?
Higher PE signifies that people are optimistic about the companies performance in the future. Research about the company's future prospect to justify whether the company deserves the higher PE or it is just pure over valuation!!
hey man! i am new at investing.was checking out a company called jk tyre's income statement.and found that even earnings increased but EPS and book value just decreased to 50 %.HOW??????
are these courses applicable everywhere like in my country philippines? is difference between your market and our? thanks preston ihave learned a lot from you but i haven't started investing yet because i think my knowledge is very poor at the momment. any advise advise for me investing in philippine stock market would be appriciated. thanks again
***** you have helped us a lot! thank you so much i'm your number one fan.
Could you go over a stock on morning star because the stocks are analyzed differently thank you for the videos again if u can't ill just search it up on utube or something. :D
how do you know it sone dollar everytime you spend 18 dollars
The basic essence of the price to earnings ratio is to calculate how much you have to invest in order to earn $1. So PE ratio of 18 says that you have to invest $18 for earning every one dollar!
This is awesome! I'm gonna keep watching next videos!
Thank you very much! 😑🙏🏼
Very nice music in every video too 🎼😑👌🏼
so basically you are saying is that at $64 a share...J&J share price is over valued right?
At over 15 times market price you are paying too much accuording to Ben.
Wow! You have explained it so well. Allow may to say if I understand it right, is that JNJ is overpriced? Bear with me, I just want to learn and to clarify if I truly understand the video. I don't care if someone laughs at my comments. No offend because I don't know anything about investing.
It's a bit over-valued now but still a consistent performer!!