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>P/E multiples of the airlines is well below that of the rest of the S&P umm that means they're discounted right? you're suggesting contradictory things
by ice109 9y ago
>P/E multiples of the airlines is well below that of the rest of the S&P
umm that means they're discounted right? you're suggesting contradictory things
- phreeza 9y agoIt means the market expects lower profits in the future.
- cbanek 9y agoIf you want to call it a discount, that's fair, but it's not really. People aren't willing to pay 15 or 20x earnings, they want to pay 9 - 12x earnings. You might call this "value" investing, or a "value" trap. This generally suggests that the income stream is less reliable to maintain, and allows for heavier discounting of future earnings. On the other hand, for a "growth" company, a high P/E might be justifiable, because in a few years they will have higher earnings.