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Price earning ratio from 40 (good) to 900 (bad)

Topics: Little Upsilon: Price earning ratio from 40 (good) to 900 (bad)


Friday, February 15, 2013 - 07:53 am Click here to edit this post
I don't get it. I have a mildly successful Public Company of Sancarlos Cars in my country. The Price-Earning ratio hovered at 40 (that's okay). Then suddenly, over the course of two human days, it jumped to over 900 (that's bad).
The facts: 1)I have NOT changed any parameter to any extreme to have set that off. 2) I did sell shares of the company and reduced my ownership to about 80 percent.
Any input appreciated


Friday, February 15, 2013 - 03:35 pm Click here to edit this post
Took me some searching to find why. You will find the reason in the available cash graph. Appears $135B was infused in the company in April.

Looking at the market value graph, understandably, it has a corresponding bump in value with the additional assets. Since this made the company more valuable and profits were relatively the same, although market price of cars dropped slightly at the same time, the market price per the (higher) share value divided by earnings (profit) ratio climbed.

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