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EnigmaDude (59.08)

Calculating PE ratios



December 23, 2008 – Comments (0) | RELATED TICKERS: SDS

For just about any company whose stock is in the S&P 500, use the following calculations to determine the forward P/E ratio:

1)  Pick your Favorite number between 1-9  

2)  Multiply by 3 then    

3)  Add 3, then again Multiply by 3  

4)  You'll get a 2 or 3 digit number...

5)  Add the digits together - this is your forward Price to Earnings ratio.

Fascinating, isn't it?  This is how the average P/E ratio for the S&P 500 is determined! (all you have to do is adjust the earnings estimates to fit)

Happy Holidays!

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