The share of company should be bought till what PE ratio? After which level does it become too costly?
- Jitendra
It's very difficult to have a thumb rule for the price-to-earnings (PE) ratio as far as a decent range is concerned. But generally speaking, at Value Research, we look at the PE ratio of an individual company for a longer period of time. We consider a company for recommendation if the PE ratio is below its 3-year median. This is a very important yardstick when we evaluate stocks individually. This could be a useful reference.
This article was originally published on September 03, 2012.
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