Price-Earnings Ratios of STI Constituents on SGX StockFacts

OREANDA-NEWS. June 05, 2015. The price-earnings (P/E) ratio shows what price investors are willing to pay for every dollar the company earns. For example, a share price of \\$2.00, with reported earnings of 20 cents per share over a year, would indicate investors are happy to pay a P/E ratio of 10 times.

A high P/E ratio can be seen as indicating an expensive share price relative to earnings, while a low P/E ratio can be interpreted as a cheap share price relative to earnings. Note that just as earnings tell part of the story of a company’s financials, the P/E ratio also provides partial information on a company’s valuation. Aside from net income, companies also report on net assets and net cash flows, which can be measured via price-to-book and price-to-cash ratios.

P/Es can be calculated on a forward estimate or historical basis. In SGX StockFacts, the historical approach is used and based on normalised diluted earnings per share (EPS). Normalised diluted EPS is the company’s normalised net income divided by the diluted weighted average shares outstanding.   

Example

Consider the following example using DBS Group Holdings:

DBS Group Holdings  P/E Ratio   =             Share Price / Normalised Diluted Earnings Per Share (EPS)

                                                            =             S\\$19.85 / S\\$ 1.621

                                                            =             12.2

Note that normalised diluted EPS is calculated using the last 12 months (LTM) of finalised earnings using a calculation as follows:

LTM = YTD + Prior FY – Prior YTD

The normalised net income of S\\$4.045 for DBS Group Holdings is based on the diluted net income for the March 2015 quarter of S\\$1.269 billion and added to the S\\$4.007 billion report for the prior 2014 Financial Year net of the S\\$1.231 billion earned in the March 2014 quarter.  This is divided by the diluted weighted average shares outstanding, to calculate the Normalised Diluted EPS.

So in this example:

Normalised Diluted EPS  =    Normalised Net Income / Diluted weighted average shares outstanding

                                               =    S\\$4.045 billion / 2.495  billion shares     

                                               =    S\\$1.621

The P/E ratios of the 30 STI stocks are tabled below. Clicking on each stock name below will bring you to the relevant the profile page on SGX Stock Facts.

Source: SGX StockFacts (Data as of 2 June 2015)

Please note that the LTM is not always derived from the sum of four consecutive quarters of data as the goal is to incorporate the most recently audited available information in the metric, and quarterly/interim results are usually unaudited. Consequently, the LTM metrics calculated by CIQ do not necessarily add up to the sum of the most recent four consecutive quarters.