Professor Guerrero's Blog

mguerrero@google.com

Co-author of East of Tiffany's, 13 short stories of a Latino immigrant's success in USA; a journey from West Harlem to Sutton Place and Park Avenue. Check out the reviews in Amazon.com and in Barnes and Noble.

on KINDLE on NOOK

My best sellers are my translations of La Dame aux Camelias and Madam Bovary

Professor Guerrero's Blog: Predicting the Future: The Price to Earnings Ratio Professor Guerrero's Blog: Book Reviews, Human Interest Articles, Accounting Lessons, and Writing Techniques

Book Reviews  

Books

Sentence Openers Book: FREE Lessons

Jane Austen  

Boethius: Consolation of Philosophy

How to Become a Writer  

Personal Finance  

Self Help, Wealth, & Learning

Greeks Romans Trojans  

Feminism  

Great Gatsby: Is Nick Gay?

All my books are now in NOOK

Ideas About the Novel is a prophetic book that all writers must own.

Ideas About the Novel by Ortega y Gasset - my translation $0.99


Next to Cervantes, Benito Perez Galdos is the most beloved Spanish writer of all times.

Torquemada at the Stake by Perez Galdos- my translation $0.99

Lazarillo of Tormes - my translation $0.99
Read it in contemporary English -- No Thous, Thees, or King James' Bible language. Transliterated into easy language for enjoyable reading pleasure. Because The Lazarillo of Tormes pointed a new direction, European and American literature benefited with titles that today are considered classics: Cervantes’ Rinconete and Cortadillo; Daniel Defoe’s Moll Flanders, Henry Fielding’s Tom Jones and Joseph Andrews; Tobias Smollett’s Roderick Random, and Peregrine Pickle; Voltaire’s Candide; Charles Dickens’ David Copperfield. And many others to include American works ranging from Mark Twain to Saul Bellow.

Dehumanization of Art by Ortega y Gasset - my translation $0.99
The Dehumanization of Art— is now a constant in music, literature, aesthetics, and philosophy, having come to mean that in post-modern times human-shaped mimesis (representation of the human) is irrelevant to art. According to Ortega, the arts don't have to tell a human story; art should deal with its own forms—and not with the human form.

Sentence Openers
How writers open their sentences makes prose agile, interesting, and athletic. This e-book teaches how to break the pattern Subject-verb-object--and discard openings that begin with nouns, articles, and pronouns.

East of Tiffany's - bestseller $5
With the city as its backdrop "East of Tiffany's" is filled with earnest tales of love, loss, faith, success and morality. While business terminology is interwoven throughout these short stories, it's not business lessons that I take away with me, but life lessons. The circumstances and the characters' profound humanity are relatable despite their zip code . "Luke, Postmodern Man" offers a new vista into faith, suffering, and love of neighbor. Way after you read this book you'll find yourself thinking about the various characters throughout the series of stories and will find solace in their unwavering faith. The narrators' ability to reflect on their hardships with such serenity is inspiring.



My writing was as flat as a sidewalk. And then I downloaded ...

Mary Duffy's Toolbox for Writers
After I purchased Mary's e-book I started to get 'A's in my essays and term papers! Every page is filled with great writing tips, training lessons, and wonderful useful writing skills! Not only do I write essays for college, but also short stories!
--IVONNIE Indrawan
College student
Sentence Openers on KINDLE

Sentence Openers on NOOK













All my books are now in KINDLE


Ideas About the Novel by Ortega y Gasset - my translation $0.99
Torquemada at the Stake by Perez Galdos- my translation $0.99
Lazarillo of Tormes - my translation $0.99
Dehumanization of Art by Ortega y Gasset - my translation $0.99
Sentence Openers
East of Tiffany's - bestseller $5


The most beloved short story from Spanish literature
All my books are in NOOK $0.99 or in Amazon KINDLE $0.99








All my books are now in NOOK

Ideas About the Novel is a prophetic book that all writers must own.
Ideas About the Novel by Ortega y Gasset - my translation $0.99

Next to Cervantes, Benito Perez Galdos is the most beloved Spanish writer of all times.

Torquemada at the Stake by Perez Galdos- my translation $0.99

Lazarillo of Tormes - my translation $0.99
Read it in contemporary English -- No Thous, Thees, or King James' Bible language.

Dehumanization of Art by Ortega y Gasset - my translation $0.99
The Dehumanization of Art— is now a constant in music, literature, aesthetics, and philosophy, having come to mean that in post-modern times human-shaped mimesis (representation of the human) is irrelevant to art.

Sentence Openers
How writers open their sentences makes prose agile, interesting, and athletic.

East of Tiffany's - bestseller $5
With the city as its backdrop "East of Tiffany's" is filled with earnest tales of love, loss, faith, success and morality.



My writing was as flat as a sidewalk. And then I downloaded ...

Mary Duffy's Toolbox for Writers
After I purchased Mary's e-book I started to get 'A's in my essays and term papers!
--Ivonnie Indrawan
College student
Sentence Openers on KINDLE

Sentence Openers on NOOK





Available in KINDLE $0.99


Available in KINDLE $0.99

Tuesday, December 15, 2009

Predicting the Future: The Price to Earnings Ratio

Wall Street

Image via Wikipedia



What is the P/E Ratio?

The P/E is a mathematical ratio. The result will not be a dollar amount, but a mathematical ratio: the relationship between the stock price and the company’s earnings. The company earnings is given by the EPS or the “Earnings per share” of the common stock. You compute the P/E by taking the share price and dividing it by the company’s EPS. P/E = Stock Price / EPS

To illustrate, a company with a share price of $40 and an EPS of 8 would have a P/E of 5 ($40 / 8 = 5). As you can see the result is the ratio ‘5.’ In the Wall Street jargon, the ratio is referred to as ‘multiples.’

How to interpret the P/E ratio or multiples

What does the ratio ‘5’ tell you? The P/E ratio of 5 tells us what the market is willing to pay for the company’s earnings. The higher the P/E the more investors are willing to pay for the company’s earnings. But there’s room for disagreement here. While some investors read a high P/E as an overpriced stock, others may see it as an indication that the market has high hopes for this stock’s future and has bid up the price. Now, a low P/E may be taken as weak signal of attractiveness by the market. It might also mean this is “a sleeper” waiting for someone to shake it out of its slumber and take off running. Known as low value stocks, many investors make it a point of “discovering” these potential marathoners.

So what is the “right” P/E?
Don’t let anyone tell you what the ideal or right P/E ratio is or might be. No such a talisman. It all boils down to the investors’ desire to pay for earnings.

However, investors do not go blindly into the fray. They have one more tool: the market’s P/E ratio average. The P/E ratio for the entire market is approximately ’20.’ All it means is that on average all investors were willing to buy stocks of companies whose earnings make sense: that neither undervalued nor overvalued. Just be aware that these multiples fluctuate from time to time.

Conclusion
If a company’s P/E is 18, I would feel comfortable with it. Likewise, if the multiples show 22 or 23, there’s no reason to lose sleep over these multiples. Why not? Well, because the multiples are hovering around the market’s average which is 20. If you compare our ‘5’ ratio to the market’s, we can draw some conclusions: (1) the stock is undervalued (2) the stock may be a sleeper (3) the stock is a dud and may never move; especially if the company is in an ‘old economy,’ type of business. Hm, maybe it is time to look for a higher multiples stock.

During the Dot.com bubble, many stocks reached the incredible multiples of 140, 160, some even 400. In hindsight, would you buy stocks whose multiples are in the hundreds knowing that the market’s average is 20? Probably not—that is till the next bubble.

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Professor Guerrero's Blog

Co-author of East of Tiffany's, 13 short stories that will warm your heart - See 101 reviews in Amazon.com and 37 in Barnes and Noble.

on KINDLE on NOOK

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