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Author
Kurach Radosław (Wrocław University of Economics, Poland), Słoński Tomasz (Wrocław University of Economics, Poland)
Title
The PE Ratio and the Predicted Earnings Growth - the Case of Poland
Source
Folia Oeconomica Stetinensia, 2015, vol. 15, nr 1, s. 127-138, tab., bibliogr. 24 poz.
Keyword
Wskaźnik C/Z, Koszt kapitału, Stopa zwrotu, Rynek kapitałowy
Price-earnings ratio P/E, Capital cost, Rate of return, Capital market
Note
summ.
Abstract
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)
Accessibility
The Library of University of Economics in Katowice
The Main Library of the Wroclaw University of Economics
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Bibliography
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ISSN
1730-4237
Language
eng
URI / DOI
http://dx.doi.org/10.1515/foli-2015-0022
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