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QuestionsCategory: MiscellaneousPB-ROE Model
Jieren Zheng asked 4 years ago

Hi Guys,
Have you guys heard of the PB-ROE model?
Heard of it recently, wondering what’s your thoughts about it.
Kinda seems like earnings yield somewhat.

2 Answers
Victor Chng answered 4 years ago

Hi Jieren,
 
The ratio is just to gauge the quality of the company. I think it is most suitable to use for deep value company. If you want to use value growth you can use the same thing except it is PE-ROE ratio

Jieren Zheng replied 4 years ago

Yea, I was thinking of playing around with the multiples but I was also thinking whether the output really means anything or not ^^”

Looks like earnings yield or low PE could more or less do it as well.

Victor Chng replied 4 years ago

I think the ratio is to measure in term of quality instead of cheapness. Sometime cheap does not mean good but quality at reasonable price may be a good bet

Jieren Zheng replied 4 years ago

Ah. Thanks for the insight!