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QuestionsCategory: Financials QuadrantPlotting average PE (TTM) for marketaxess
julian kay asked 5 months ago

Hi Victor, 
I am trying to plot the average PE (TTM) on excel for marketaxess
I understand for PE (historical), I can get the numbers from the annual report for the respective years. 
However, for marketaxxes (PE based on TTM), how do i get the TTM figures for the inputs?
seek your advise, thanks!

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5 Answers
Victor Chng answered 5 months ago

Hi Julian,
when plotting the PE Chart, just use the historical EPS.
TTM is used only when you want to calculate the intrinsic value. 
 
TTM is based on the latest four quarter result. The EPS is the sum of the following EPS:
 

  • 2Q2020 EPS
  • 3Q2020 EPS
  • 4Q2020 EPS
  • 1Q2021 EPS

 

Sharon Chan replied 5 months ago

Hi Victor, Do we use TTM EPS and 10yr ave PE to derive the Intrinsic Value for all scenarios? or do we tweak the EPS under different scenarios

Victor Chng replied 5 months ago

In most cases, you should be using 10Y average PE unless the company is growing faster in recent years then you use 5Y average PE.

For US companies, it is best to use TTM EPS as investors follow quarter report closely. As for Asian companies, you can use historical EPS.

Sharon Chan replied 5 months ago

So it depends on what stage of growth the company is at. for fast growers use 5yr ave EPS, ave/sustained growers use 10-yr historical EPS & US growing companies use TTM EPS. Thanks.

Victor Chng replied 5 months ago

Yes you are right Sharon.

Sharon Chan replied 5 months ago

thank you Victor

Victor Chng replied 5 months ago

Welcome Sharon :)

julian kay answered 5 months ago

ahhh…ok thanks Victor!

Victor Chng replied 5 months ago

Welcome Julian :)

julian kay replied 5 months ago

Hi Victor,

I just check that for MKTX they have diluted EPS.

So should i use diluted EPS or EPS for PE calculation?

seek your advise, thanks!

Victor Chng replied 5 months ago

Use diluted EPS to be conservative.

julian kay replied 5 months ago

ok noted, thanks!

julian kay answered 5 months ago

Hi Victor, 
Here’s my PE chart and intrinsic value based on diluted EPS.
let me know if my calculation is good. Thanks!

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Victor Chng answered 5 months ago

Hi Julian,
It is hard for to look through the figures in PDF. Can you send the excel to victor@fifthperson.com

Victor Chng answered 5 months ago

Hi Julian, 
 
I had look through your valuation chart, the calculation is all correct. Keep up the good work :)

julian kay replied 5 months ago

thanks Victor!