PE Multiples Are Not Valuation, They Are Shorthand: Mauboussin
Price-earnings multiples (PE multiples) are the most commonly used tool for evaluating a stock’s future prospects, but according to Credit Suisse analysts Michael Mauboussin and Dan Callahan, few have a solid grasp on what it means.
“The sloppy use of multiples is almost everywhere you look,” write Mauboussin and Callahan. “PE multiples are widespread in use yet remarkably poorly understood.”
Valuation can be broken down into multiple components
They argue that company valuations are . . .
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