Explain these abbreviations

dsam · 1 Explain these abbreviations Tue Jun 21, 2011 10:19 pm

dsam

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Dear friends,
I am new to this forum.Please someone can explain me these abbreviation.
PE
Sector PER
NAVP
XR day

Last edited by Quibit on Wed Jun 22, 2011 7:59 am; edited 2 times in total (Reason for editing : spelling corrected)

xhora · 2 Re: Explain these abbreviations Tue Jun 21, 2011 10:46 pm

xhora

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PE : Price earning ratio
this is the ratio between Current market price and annual earning per share EPS (from company income statement)

PE = Price / EPS
example RICH has a current share price of 12.2 and EPS for the year 0.87 the it's PE is
PE = 12.2/0.87 = 14.02

Sector PER : Sector Price Earning Ratio
This is the average of all the PE ratios of companies that operate in the same sector. This can be used as a crude estimation to see it a particular share is overvalued or undervalued compared to the sector. Can be obtained from here
http://www.cse.lk/sectors/sectorSummary.htm

Example
RICH belongs to Diversified Sector (DIV) it has a PER of 34.80. Accroding to this RICH is undervalued.

Note that when to evaluation it's best to discount this PE to get a fair value. So a good sector PER for diversified sector can be 20. Many stock brokers publish these fair value PER's

NAVPS :Net Asset Value Per Share
This is the answer we get when we divide shareholder's fund by total outstanding shares. There is no need to calculate this as any financial report will have already calculated figure.
This is also used to value a share. Rule of thumb is share price need to be in excess of NAVPS. But in CSE you will find lot of shares that are exception for this.

XR : Date
Have been discussed many times before. In essence XR date is same as Xd date, but instead of dividend you will be entitled to Rights.
please follow these two links
http://forum.srilankaequity.com/t4682-what-is-xd-date
http://forum.srilankaequity.com/t2988-after-xr-date

nkalansu · 3 Re: Explain these abbreviations Tue Jun 21, 2011 10:58 pm

nkalansu

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PE = Price earnings ratio
This is the ratio between the Price and earnings per share (EPS) of a stock.
Say Stock X has Market price of Rs. 25 and its Earnings per share is Rs. 5 for the latest year. Then PE is 25/5 = 5

EPS = earnings attributable to the equity holders of the parent company (or Net profit after tax) divided by total number of shares

Sector PER = Sector PE ratio is the PE ratio of all the companies of the particular sector. If you take the banking sector you can arrive at a sector PE. (It can be calculated by taking weighted average PE using market capitalization of each company in the sector.)

NAVP = Net asset value per share
You divide the equity attributable to the equity holders of a company by total number of shares you arrive at this number.

XR day = Ex -rights day

You are not entitled to rights of the company which has announced a rights issue if you purchase the stock after this date

XD = Ex - Dividend date

You are not entitled to dividends of the company which has announced a dividend if you purchase the stock after this date.