Stock with Lower PE Ratio is not Always a Better Investment Choice | Fundamental Analysis

নতুনদের জন্য শেয়ার বাজার বিশ্লেষণ (Fundamental and Technical Analysis)

বই লিংক: https://tinyurl.com/3x8y9wm4

Topic: Stock with Lower PE Ratio is not Always a Better Investment Choice | Fundamental Analysis | Dhaka Stock Exchange

Usually it is considered that if PE Ratio of a company is lower, that is a good investment choice and if PE Ratio of a company is higher, then that is a bad investment choice. In Bangladesh it was a wide spread idea.

If a company is having high growth in sales and net profit then it is likely that the company’s share will be traded at higher PE Ratio. But if a company is having low growth in sales and net profit then it is likely that the company share will be traded at lower PE Ratio. PE Ratio differs across industries as well. PE ratio has a strong relationship with growth potential of a company.

If it is found that two companies with similar business having same amount of sales and net profit and growth at similar rate and all other fundamental aspects are identical, in such case, stock with lower PE Ratio will be preferable.

So in general it cannot be concluded that stock with lower PE Ratio is always better. Many other fundamental indicators are needed to be considered before making an investment decision. 

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#PE #Ratio #Investment #Choice #Earnings #Profit #Growth #Finance #School #Shihab

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DISCLAIMER: The topics discussed are explained exclusively from Shihab's personal point of view and understanding or there might be information provided with proper references. All the information provided in this channel is for educational and informational purposes only. The information presented should not be considered as financial or legal advice. This channel does not guarantee you about anything. As a human being content creators can make mistakes unintentionally. Always do your own research before taking any action.

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Bangladesh Securities and Exchange Commission (BSEC) Website: www.sec.gov.bd

Dhaka Stock Exchange - DSE Website: www.dsebd.org    

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