Qi Jie asked 4 years ago
Hi, would like to clarify about the computation of Historical PE. I saw the 2 previous post, however I still have some qns about it.
Firstly, for the first post – https://investmentquadrant.com/question/how-to-calculate-historical-pe-ratio/
If I use only the closing price and EPS when Annual reports are out, won’t I get only 5 PE ratios for 5 years?
Is this enough to have a rough gauge of Average Historical PE?
Let’s say it is not enough and I refer to the second post – https://investmentquadrant.com/question/compute-historical-pe/
You mentioned about using Yahoo Finance to get the historical price data. May I know the frequency that you use, is it monthly, weekly or daily?
After getting the price data, do you divide all the (12 prices or more?) by the EPS for that particular year annual reports?
Also for the EPS, do u make any adjustments (E.g. excluding one-off gain or lost) or you take the EPS value in the annual reports as it is?
Next, for the plotting of the graph I suppose you use excel to show the data? Or is there other software for it?
Last but not least, those 2 posts are 2 to 3 years ago. Is there a less tedious way to obtain Historical PE or a software to show the Historical PE of Singapore Listed Companies and if possible, other countries stock market?
Thank you.
Victor Chng answered 4 years ago
Hi Qi Jie,
As mentioned by Jieren, use daily price and plot out their daily PE ratio. From the daily PE ratio, you can find the average PE.
Yes bloomerg terminal, Factset, Thomson Reuters and CapitalIQ can solved this issue and give you the PE chart in less than 1 min but it will cost you about USD$2000 per month just to generate this chart. My take is that it may seem tedious but when it comes to investing some work have to be done. In the initial part it may take you quite some time to do it but it will get easier as times goes. Now I can collect the PE ratio chart within 15 min.
Qi Jie answered 4 years ago
Thanks JR and Victor for the reply!
So just to cfm, e.g. lets say I will take the EPS of BreadTalk for the FY2014 (did my own adjustments). Next I will go to Yahoo Finance to find the daily price for BreadTalk in year 2014. Now, with the 2 data, I will compute my own PE for year 2014? Is that correct?
Assume I plot my own chart and came up with a data, how many years of historical PE should I use? is 5 years enough and 10 years too much? Or what is a good range?
Thank you!
Victor Chng answered 4 years ago
Hi Qi jie,
If possible take at least 10 years of daily price data.
For instance, you downloaded the daily price chart of breadtalk (BT). For BT, their full year result year end is December. Hence for example, their FY2013 result will only be release in Feb 2014. Hence the price from 1 Mar 2014 to 28 Feb 2015, I will input the FY2013 EPS to compute the PE ratio. This way you will obtain the historical PE ratio chart.
Qi Jie
replied 4 years ago I see, so in this case there is a lapse in the PE ratio? Assuming people will base on FY2013 to invest for 2014 and 2015?
Qi Jie
replied 4 years ago I believe once I download the data, excel have some functions to divide all the values by the EPS? So is less tedious?
Victor Chng
replied 4 years ago Yes, you can key in the excel formula and it will be auto already. Yes there is a lapse in the data assume people based on the full year release to make decision but there is also the trailing PE method. Once, the latest quarter release, you can take the sum of latest four quarter to calculate the EPS. The trailing PE method is more tedious and personally I don;t do it.
Qi Jie
replied 4 years ago Ok noted Victor!
Lastly, is taking the open price good enough? Or should I take the close or Adj close price (Accounts into stock split and dividends)?
Not too sure what do they mean when they account into dividends, like do they deduct the share price according to the dividend for that year?? or how it works?
Victor Chng
replied 4 years ago If the company did not do split before then you take the close price but if the company split or consolidated their share before then the adjusted price is a better figure but also remember to adjust your EPS for split or consolidation if any.
Qi Jie
replied 4 years ago For the dividend part in Adjusted close price is there anything to take note?
Qi Jie
replied 4 years ago The data for close and Adj close have quite abit of diff even though both already account for stock split. So is there anything about the dividend I need to take note for Adjuisted close?
Victor Chng
replied 4 years ago If that the case, you can just take the close one. Don;t take the adjusted for dividend.
Qi Jie
replied 4 years ago ok tks alot Victor!
Victor Chng
replied 4 years ago Welcome :)
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My own thoughts:
I would suggest going to each year’s annual report to take the EPS figure and adjust it. Sometimes there are some discrepancies for the 5 year one and you can’t adjust because you don’t have data also.
I use daily ones, just look for the peaks and troughs to give you the rough estimate of each year’s highs and lows, since the adjusted EPS is the same.
I don’t really plot the data, just use the highs and lows of each year to determine to lowest of 5 and 10 years and highest of 5 and 10 years as gauge. I think Victor and Rusmin do plot.
You can use bloomberg terminal and paid investment research tools (Factset etc) but for free I haven’t found anything yet though. Do let me know if you find any :)
Thank JR
Welcome