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I'm not sure if I fully understand your question. If you mean that a stock is trading "at five times earnings" this means that the price of this stock is five times as high as reported or future earnings of the company. This ratio is calles Price-to-earnings ratio and is a measure for the valuation of a stock. The lower the P/E the cheaper is the stock. The valuation also depends on popularity of the stock, the company's earnings growth and the industry it operates in. I've already answered this question. Pleas see: http://wiki.answers.com/Q/What_is_the_price-earning_relationship&updated=1&waNoAnsSet=1
What else can I help you with?
How does compound interest work with stocks?
Compound interest with stocks works by reinvesting the earnings from your initial investment, which then generate more earnings. Over time, this compounding effect can significantly increase the value of your investment.
What does capital structure mean?
Capital structure refers to the ways on how a firm finances its overall operations and growth. It includes long-term debt, common and preferred stocks as well as retained earnings.
What are stocks?
In simple language, stocks are shares in the ownership of a companies. Stocks represents a claim on the company's assets and earnings. As you acquire more stock, your ownership stake in the company becomes greater. Whether you say shares, equity, or stock, it all means the same thing.
What happens if you own stock before a stock repurchase and do not sell any of your stock?
If the company decides to repurchase stocks, the number of shares outstanding is reduced. If you don't sell your stocks your interest in the company is increased for your stocks make up a higher percentage of all outstandig stocks. Stock repurchases are often performed by companies whose earnings growth is mediocre in order to increase earnings per share. This factor influences stock prices, so stock repurchases are often welcomed by investors. Companies also decide to repurchase stocks because the increase in the value of your stocks is not taxable, unlike dividend payments. If a company sells new shares the earnings per share are reduced, which often affects stock prices in a negative way. In order to maintain your stake, you have to buy new shares, if not, your stake becomes lower. If the sale of new stocks is necessary because of aquisitions this is much more favorable instead of capital that is raised in order to pay debts because this would not likely increase per share earnings.
Why do stocks spike after hours?
Stocks can spike after hours due to factors such as positive news announcements, earnings reports, or market speculation. Lower trading volumes during after-hours trading can also lead to more significant price movements.
How does compound interest work with stocks?
Compound interest with stocks works by reinvesting the earnings from your initial investment, which then generate more earnings. Over time, this compounding effect can significantly increase the value of your investment.
What is buying and selling high risk stocks called?
When an investor trades stocks of corporations that are known to be risky investments due to any variety of reasons, such as company with an earnings record that is unpredictable and whose stock price is volatile, this is often termed "speculation". Generally speaking the trader buys and sells these stocks very frequently and frequently can be as much as multiple times in one day. For the most part the stocks or bonds of the company have high price to earnings multiples. They will not be found in major indexes such as the Dow Industrial Average.
What does capital structure mean?
Capital structure refers to the ways on how a firm finances its overall operations and growth. It includes long-term debt, common and preferred stocks as well as retained earnings.
What are the traits of growth stocks?
There are a lot of different traits of good growth stocks. Two of the traits that connote a good stock are high profit margins and accelerating earnings growth.
What They Don't Teach You in School?
Out of all of the things that they don't teach you in school, how to pick stocks may be one of the worst. Most schools do not even touch on the subject. Therefore, you have to take this upon yourself to be able to figure everything out and choose the right stocks. When trying to figure out how to pick the right stocks the main thing that you want to look for are stocks that are particularly undervalued. This can be most simply measured by their price to earnings (PE) ratio. That number lets you know how many times the earnings number the stock price is trading at. The lower the PE, the better the bargain. This is just one method to use of course, but it is a highly effective one as well.
What percentage of tax do you have to pay on commissions from commodities sale?
When claiming commissions on commodities or stocks they are simply added into your total earnings for the year. You get taxed at a rate dependent upon your total earnings ( your tax bracket ).
What are stocks?
In simple language, stocks are shares in the ownership of a companies. Stocks represents a claim on the company's assets and earnings. As you acquire more stock, your ownership stake in the company becomes greater. Whether you say shares, equity, or stock, it all means the same thing.
What are blue chippers?
Blue chippers are stocks that sell at a high prices because of public confidence in its long record of steady earnings.
What happens if you own stock before a stock repurchase and do not sell any of your stock?
If the company decides to repurchase stocks, the number of shares outstanding is reduced. If you don't sell your stocks your interest in the company is increased for your stocks make up a higher percentage of all outstandig stocks. Stock repurchases are often performed by companies whose earnings growth is mediocre in order to increase earnings per share. This factor influences stock prices, so stock repurchases are often welcomed by investors. Companies also decide to repurchase stocks because the increase in the value of your stocks is not taxable, unlike dividend payments. If a company sells new shares the earnings per share are reduced, which often affects stock prices in a negative way. In order to maintain your stake, you have to buy new shares, if not, your stake becomes lower. If the sale of new stocks is necessary because of aquisitions this is much more favorable instead of capital that is raised in order to pay debts because this would not likely increase per share earnings.
What is retained earnings a asset?
When a company purchases stocks, it is shown as an investment on the Asset side of the Balance Sheet. However, if a company buys back its own stock, it is shown in the Retained Earnings section of the Balance Sheet as Treasury Stock.
Why do stocks spike after hours?
Stocks can spike after hours due to factors such as positive news announcements, earnings reports, or market speculation. Lower trading volumes during after-hours trading can also lead to more significant price movements.
How do you calculate stockholders equity?
You can get the Stockholders Equitys by finding out what the preffered and common stocks are at par value which is the minimum a company can issue their stocks for. Then figuring out the additional paid in capital which is the market price minus the par value for both the preffered and common stock. Once you find that, you add retained earnings. If the retained earnings is not given, then you take your net income minus dividends and treasury stock.
