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.
Victor Chng Staff answered 4 years ago
Hi Jieren,
I have not hear before this model. Can you point me to the link so I can go read what it is about?
Jieren Zheng
replied 4 years ago Hi Victor,
Some links:
http://value-edge.com/2016/05/16/introducing-pb-roe-the-combined-asset-earnings-valuation-framework/
https://seekingalpha.com/article/40398-pb-roe-analysis-a-very-useful-tool
https://seekingalpha.com/article/2557745-the-relationship-between-roe-p-b-and-p-e-as-seen-in-at-and-t
http://www.northinfo.com/documents/29.pdf
Have a look :)
Victor Chng Staff 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 ChngI 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!