PE Ratio / Book Value / PS Ratio?

Hi! All,

Just wanted to request for your valuable inputs on choosing PE/PB/PS. Which one you would choose as a criteria, and why?. If you are going to ask the sector or industry, I will have to say investment brokerage IBKR is the symbol.

Any help is appreciated.

thanks
- db

PE is a good measure but many companies trade at many PE ratios. You might want to try PEG. G is growth. a percentage for future returns. If you have a PE of 10x earnings and you have 10% growth, The PEG is 1. decent right. nobody cares what money you made yesterday, they only want tomorrow's dollar. Also look at buying right before a good earnings report.

I tried to pull up information on interactive brokers group inc. I could not find any financials. Most of the time these kinds of companies are evaluated based on book value.

When using valuation metrics such as the ones you listed in your question, you should use as many as possible because sometimes one may not give you the right answer.

When looking at financial stocks, it is sometimes hard to determine exactly what counts as "earnings". (Does a bank earn money on its loans or on the spread between interest rates for loans vs. deposits, etc) Also, what does a finanical firm use as a measure of "sales"? That's why most financials are valued using P/BV or dividend yield (Dividend/Price).

Other useful ratios for comparison are the Return on Assets (ROA) and Return on Invested Capital (ROIC). Good luck!

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