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E is the company's earnings, not what it earns (or rather pays out to in that period) the shareholder. You (and maybe GP) seem to be confusing it with dividend
by OJFord 3y ago
E is the company's earnings, not what it earns (or rather pays out to in that period) the shareholder. You (and maybe GP) seem to be confusing it with dividend yield?
- blackoil 3y agoAs an owner of company, valuation includes both profit withheld and dividend. Think you have 100% of a company with $100 in bank, it makes a profit of $20 and gives $5 as dividend and keeps $15 so now has $115 in account. So, owner got $5 in cash and the book value of company is now 115, and future valuations will reflect on that.
- Sohcahtoa82 3y agoIn an ideal world, yes. But in the real world, company valuation is an entirely subjective matter that prices in expected future growth or losses.
- OJFord 3y agoIs it not clear from my parenthetical there that I understand that? > it earns (or rather pays out to in that period) the shareholder Comment I replied to was calling dividends, and only dividends, within a given year we're calculating P/E for no less, the company Earnings. That just isn't correct, whatever your views on valuation, shareholder ownership, and market efficiency.