Hey guys!
Always I come across things like 16x FY18E under recommendations for stocks by various research institutes. Now one such thing is this “Sun Pharma (SUNP) is trading at 16x FY19E PER, which is 20% and 30% below its 10- and 5-year average valuations, respectively” . Could anyone enlighten me on what 16x FY19E PER means?
Thank you.
FY19E means Financial Year 18-19
E means Estimate
PER is P/ E RATIO. Stock price divided by Earning per share.
It means that the stocks is trading 16 times (16x) the forward estimate of its earning. The forward estimate here is basically the expected earnings of the company in 2019.
16 times the forward estimate. So does that imply that the stock is overvalued by 16 times?