# Estimate Future PE for a company using only earning/equity growth rate

## How do you calculate future PE?

You can calculate a company’s forward P/E for the next fiscal year in Microsoft Excel. As shown above, the formula for the forward P/E is simply **a company’s market price per share divided by its expected earnings per share**.

## How do you calculate PE for a private company?

The formula for the P/E ratio involves **dividing the latest closing share price by its earnings per share**, with the EPS calculation consisting of the company’s net income (“bottom line”) divided by its total number of shares outstanding.

## How do you calculate future price with EPS?

Determining Market Value Using P/E

**Multiply the stock’s P/E ratio by its EPS to calculate its actual market value**. In the above example, multiply 15 by $2.50 to get a market price of $37.50.

## How do you calculate PE from Roe?

Using the P/E to Estimate the Cost of Capital

It demonstrates how to correct the value driver formula **P/E = (1-g/ROE)/(k-g)** for inflation and changing returns.

## How do you calculate the future price of a stock without dividends?

The P/E Ratio. **The price-to-earnings ratio or P/E ratio is a popular metric for valuing stocks that works even when they have no dividends**. Regardless of dividends, a company with high earnings and a low price will have a low P/E ratio. Value investors see such stocks as undervalued.

## How do you calculate PE on Excel?

**Price to Earnings Ratio = (Market Price of Share) / (Earnings per Share)**

- Price to Earnings Ratio = (Market Price of Share) / (Earnings per Share)
- PE = 165.48/11.91.
- PE = 13.89x.

## What is the formula for valuing a company?

The formula is quite simple: **business value equals assets minus liabilities**. Your business assets include anything that has value that can be converted to cash, like real estate, equipment or inventory. Liabilities include business debts, like a commercial mortgage or bank loan taken out to purchase capital equipment.

## How do you use PE ratio to value a company?

For example, if a company has earnings of $10 billion and has 2 billion shares outstanding, its EPS is $5. If its stock price is currently $120, its PE ratio would be 120 divided by 5, which comes out to 24. One way to put it is that **the stock is trading 24 times higher than the company’s earnings**, or 24x.

## What are the 3 ways to value a company?

When valuing a company as a going concern, there are three main valuation methods used by industry practitioners: (1) **DCF analysis, (2) comparable company analysis, and (3) precedent transactions**.

## What is the relationship between PE ratio and growth rate of the company?

The PE ratio of a high growth firm is a function of the expected extraordinary growth rate – **the higher the expected growth, the higher the PE ratio for a firm**. In Illustration 18.1, for instance, the PE ratio that was estimated to be 28.75, with a growth rate of 25%, will change as that expected growth rate changes.

## Is ROE same as PE ratio?

Key Takeaways. Price-to-book value (P/B) ratio is a financial ratio measuring a company’s market value to its book value. **Return on equity (ROE) is a financial ratio that measures profitability and is calculated as net income divided by shareholders’ equity**.

## Is ROE the same as P E?

For seasoned value investors, **higher return on equity (RoE) and lower price to earning (P/E) ratios are key parameters to invest in a stock**. For seasoned value investors, higher return on equity (RoE) and lower price to earning (P/E) ratios are key parameters to invest in a stock.

## What is a good PE ratio?

So, what is a good PE ratio for a stock? A “good” P/E ratio isn’t necessarily a high ratio or a low ratio on its own. The market average P/E ratio currently ranges from **20-25**, so a higher PE above that could be considered bad, while a lower PE ratio could be considered better.

## Which is better ROE or EPS?

EPS. **The ROE is a better gauge than simple EPS** of how a company is deploying its capital to build a profitable business. The higher the ROE, the more wealth the company is creating for its shareholders, and the better return they can expect from their investment.

## What is the ROIC formula?

Formula and Calculation of Return on Invested Capital (ROIC)

Written another way, **ROIC = (net income – dividends) / (debt + equity)**. The ROIC formula is calculated by assessing the value in the denominator, total capital, which is the sum of a company’s debt and equity. There are several ways to calculate this value.

## Is ROC and ROIC the same?

**ROC is sometimes called return on invested capital, or ROIC**. As with ROE, an investor could use various figures from the balance sheet and income statement to get slightly different variations of ROC.

## What is the difference between ROI and ROIC?

**While the ROIC considers all of the activities a company undertakes to generate a profit, the return on investment (ROI) focuses on a single activity**. You get the ROI by dividing the profit from that single activity (gain – cost) by the cost of the investment.

## What is ROIC example?

ROIC Example Calculation

Simply put, the profits generated are compared to how much average capital was invested in the current and prior period. **If a company generated $10 million in profits and invested an average of $100 million in each of the past two years, the ROIC is equal to 10%**. $10m ÷ $100m = 10%

## Where can I find ROIC data?

ROIC is already calculated for many businesses on websites such as **MSN Money, Yahoo Finance, and Google Finance**. Instructions on where to find 1 and 5-year ROIC on MSN are included on page 107 of my Rule #1 book. Therefore, the most common use for this calculator will be to determine ROIC for data older than 5 years.

## How do you calculate capital investment?

Invested capital is calculated by **taking the assets used in the operations less the liabilities used in the operations**. Capital employed is calculated by taking net debt plus the balance sheet value of shareholders’ equity.