The PE Ratio and the Predicted Earnings Growth - the Case of Poland

• Autorzy: Radosław Kurach , Tomasz Słoński
• Języki publikacji: EN

Abstrakty

EN

We examine the components of equity returns on the Polish capital market. To analyse the underlying complexity of returns we took into consideration the model designed by Leibowitz (1999). This model captures three factors: dividend yield, expected growth in earnings and expected change in price-to-earnings (PE) ratio. We applied this model to analyse the average discount/premium not only to particular shares but to market averages as well. Firstly, we examined the variation of PE across the companies (as adapted from Penman (1996)) to analyse the average rate of return and their striking distance of individual stocks from a 'normal' level. Then we checked the transitory earnings in the portfolios of high PE, whereby a fall in current earnings relative to sustainable level of earnings leads to a transitory high PE ratio. We expect that the effect of transience in current year earnings can be significant. Lastly, we analysed the individual companies in order to check what percentage of companies give a "correct" signal about future prospects.(original abstract)

Słowa kluczowe

EN

Capital cost; Price-earnings ratio P/E; Capital market; Rate of return

PL

Koszt kapitału; Wskaźnik C/Z; Rynek kapitałowy; Stopa zwrotu

• Czasopismo: Folia Oeconomica Stetinensia
• Rocznik: 2015
• Tom: 15
• Numer: nr 1
• Strony: 127--138

Twórcy

autor

Radosław Kurach

• Wrocław University of Economics, Poland

autor

Tomasz Słoński

• Wrocław University of Economics, Poland

Bibliografia

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Identyfikatory

DOI

10.1515/foli-2015-0022