Four months ago, u/doctor101 wrote an excellent post entitled:
u/doctor101 Price Target for Revive Therapeutics using projected revenue, times-revenue valuation (10-15x), and 380 million shares; $2 to $12
I happened on the article a few weeks late and responded to it there, but I think a refreshed view is worthwhile, especially because the Omicron variant is changing the game. Before I start, I want to point out that I am using Moderna (MRNA) as a comparable because as one-product companies in the same industry, it is not unreasonable to assume that RVV and MRNA margin rates and stock performance would be similar.
u/doctor101 used the multiple-to-sales valuation method, which I do not believe is applicable to RVV's case. It is a valuation method primarily used for high growth tech companies without earnings. RVV, as I will show below, can potentially generate significant earnings per share and should therefore be valued using the price-to-earnings multiple. This generates much higher target prices than the multiple-to-sales approach.
The numbers I use are the ones I feel most likely to occur, except the price per pill number, which is based on u/doctor101 due diligence, where he discovered that Bucillimine sells for approximately $0.50 per pill in Japan and Korea. I think this number might be too low for the treatment for Covid, but it is a true reference point so I will use it. It also makes for better comparison with u/doctor101 's estimates.
The pre-tax margin rate I use in my base case is 40%, which is approximately halfway between MRNA's 58% pretax margin and a standard corporate pre-tax margin of 20%. However, I have added scenarios at the 58% rate for the fun of it.
The real unknown is the size of the market for covid therapies, especially at this point in the cycle. We also don't know when RVV will come to market, if they do at all. Omicron appears to be a mild strain that doesn't make people incredibly sick like its predecessors have done. As a result, many people might never get tested or go to a doctor, or ask for a treatment therapy. Of course, some people will get very sick and die, that is for sure. Maybe it all balances out. So can we expect to sell 50 million or 500 million treatments? I use 50 million and 100 million, both of which seem reasonable to me.
I also assume that these scenarios will perfectly fit into the 2023 fiscal year. But they probably won't:
https://preview.redd.it/mg7eh7w6ub781.png?width=936&
... keep reading on reddit ➡
#Introduction The world of finance is absolutely filled with people making claims about what’s good or bad, how you should or shouldn’t do something, and what you can and can’t achieve. My goal is to take a look at these claims, spend some time researching them, and then share what I’ve found. I’m going to investigate various strategies, ratios, indicators, portfolios, and general market concepts with the goal of determining which ones are just noise and which ones might help you get ahead.
This is the first in a series I’m calling Ratio Review where I will be taking a deep dive into various popular fundamental metrics such as price to earnings, price to book, and return on assets. I will start by giving a brief description of how you calculate the metric, followed by how it is typically used, followed by how it should be used, and most importantly, if it gives you any kind of advantage when selecting stocks. Let’s kick this off by talking about arguably the most popular fundamental ratio out there – price to earnings.
#What is P/E? Let’s say a company’s stock costs 10 dollars, that there are 100 shares in existence, and that the company earned a total profit of 50 dollars this year. The price to earnings ratio, or P/E ratio, is calculated by dividing the current share price by a company’s earnings per share. Well, what is earnings per share you now ask. Earnings per share is calculated by taking a company’s profit and dividing it evenly amongst all shares. The earnings, when divided by the number of shares, results in 50 cents of profit a piece. Now to calculate the P/E ratio you simply divide the price by this number, which is 10 divided by 0.5, which results in a P/E of 20.
So, is 20 good? Bad? It’s complicated!
#Is P/E useful? If you’ve ever looked at any article, video, or strangers comment on the internet that’s talking about the price to earnings ratio you will almost always hear the same thing. BUY when the P/E is low, AVOID when P/E is high. This is by far the most common discourse and unfortunately is a great oversimplification.
Some sources you’ll see will take this one step further to say that you should buy stocks with a low price to earnings ratios within their own sector, because different sectors have naturally different average P/E ratios. For example, the financial sector currently has an average P/E of about 23 whereas the technology sector currently has an average of about 37. This is a big step up from the las
... keep reading on reddit ➡
The price-earnings ratio (PE ratio) or price-earnings multiple is one of the many valuation ratios used by investors to determine if a stock is cheap or expensive. Overall, it measures how much an investor is paying for a stock compared to the company’s earnings.
P/E ratio = Stock Price / Earnings Per Share (EPS)
It's important to note that it's only one indicator and doesn't tell the full story. Typically, I use it as a gauge for market sentiment by looking at what variable is actually causing the movements; price or EPS.
Most investors neglect it but I think it's handy for a quick glance to start building a narrative around a stock.
Just think of it like this. GME is expected to gain value in an rising market. The gaming sector is growing. GameStop changes it business and also sells PC components. It's becoming an e commerce hybrid. It has the fundamental of a giant that Gamestop is with the freshness and innovative that it's becoming with the new staff. There is no "universal" gaming market. There is steam by valve, there is the ps store, Microsoft store but GameStop will be the place where gamers unite. Tldr: Gamestop is fairly priced=not overvalued GameStop is rising and earnings will show GameStop became debt free by clever moves THE SQUEEZE IS INEVITABLE Hold, become billionaire by squeeze or millionaire by Gme's natural growth XX Holder 💎💎
Hello AMD bulls and bears. I don’t have much to say in this post but I just want to point out that AMD’s P/E ratio currently sits at 41.58 as of this post. I wanted to point this out because it was not too long ago when our P/E was well above 160. Thus, we aren’t seeing the crazy valuations that exist in other tech stocks like NVDA, which has a PE of around 80.
With AMD’s rapid earnings growth and the recent dip, I’d say it’s a good buy if we look in terms if the P/E.
Why some shares don't report Price to Earnings Ratio (TTM) ?
some of them were reporting it yesterday, and now they are disappeared.
I know I chose a rather offensive title for a lot of low PE Investors but let me explain a bit more why.
The Price Earnings Ratio is meaningless BY ITSELF.
I’m afraid too many People focus on a low Pe. They run their scanners when they are looking for investment opportunities and then when they find a PE of 5 they think they found the holy grail.Here are a few things that the PE won’t tell you
Worst of all :
“Profits are an opinion, Cash is a fact” - Alfred Rappaport
Are Profits really Profits?
Basically the management team has a lot of room to manipulate Earnings. It’s actually possible to be “profitable” but cash is flowing out of the company year after year. The “Profits” could be very misleading. Always compare the cashflows with the net profits they claim to make!
The Company could have a lot of debt and it’s possible they can’t manage it!
The Price earnings ratio is based on Market cap and does not include the debt. Always look at the Enterprise Value to see the real price of a Company!
Sales and Earnings could be declining
A really bad scenario would be if a company keeps making less money year after year. Within a few years a low PE would turn into a high PE ( assuming the price is constant). This is not a scenario that you want and it would turn a cheap stock into a quite expensive stock
There was a one off event
A one off Event is an event that occurs once and then it won’t repeat. Profits could’ve been higher last year because the Company sold an asset. It depends how they book it BUT it’s likely that it will distort the Price earnings ratio for that period. Even worse. If they sold parts of their company they will likely earn less money in the future. Once again this is not a scenario that you want!
The Company could face expensive lawsuits
Another thing the PE doesn’t tell you is that the company might face huge fines in the near future. Did they put the money aside already ? If not it can hurt earnings
The company could have declining Margins
Another thing the Price Earnings Ratio won’t tell you are if Margins are declining. This could be because of new competition etc. Once again a bad scenario that will turn a low PE into a high PE stock over some time
Can you think of other reasons why the PE could be misleading? I am looking forward to your comments.
Hi guys,
I just need some help interpreting the PE ratio of a company. Let's take Amazon for example, its current PE ratio is around 128.05.
Does this mean if I were to invest in Amazon shares; for every $1 they earn I am paying $128.05?
If this is the case, does this not mean that the stock is extremely overpriced?
#Introduction The world of finance is absolutely filled with people making claims about what’s good or bad, how you should or shouldn’t do something, and what you can and can’t achieve. My goal is to take a look at these claims, spend some time researching them, and then share what I’ve found. I’m going to investigate various strategies, ratios, indicators, portfolios, and general market concepts with the goal of determining which ones are just noise and which ones might help you get ahead.
This is the first in a series I’m calling Ratio Review where I will be taking a deep dive into various popular fundamental metrics such as price to earnings, price to book, and return on assets. I will start by giving a brief description of how you calculate the metric, followed by how it is typically used, followed by how it should be used, and most importantly, if it gives you any kind of advantage when selecting stocks. Let’s kick this off by talking about arguably the most popular fundamental ratio out there – price to earnings.
#What is P/E? Let’s say a company’s stock costs 10 dollars, that there are 100 shares in existence, and that the company earned a total profit of 50 dollars this year. The price to earnings ratio, or P/E ratio, is calculated by dividing the current share price by a company’s earnings per share. Well, what is earnings per share you now ask. Earnings per share is calculated by taking a company’s profit and dividing it evenly amongst all shares. The earnings, when divided by the number of shares, results in 50 cents of profit a piece. Now to calculate the P/E ratio you simply divide the price by this number, which is 10 divided by 0.5, which results in a P/E of 20.
So, is 20 good? Bad? It’s complicated!
#Is P/E useful? If you’ve ever looked at any article, video, or strangers comment on the internet that’s talking about the price to earnings ratio you will almost always hear the same thing. BUY when the P/E is low, AVOID when P/E is high. This is by far the most common discourse and unfortunately is a great oversimplification.
Some sources you’ll see will take this one step further to say that you should buy stocks with a low price to earnings ratios within their own sector, because different sectors have naturally different average P/E ratios. For example, the financial sector currently has an average P/E of about 23 whereas the technology sector currently has an average of about 37. This is a big step up from the las
... keep reading on reddit ➡#Introduction The world of finance is absolutely filled with people making claims about what’s good or bad, how you should or shouldn’t do something, and what you can and can’t achieve. My goal is to take a look at these claims, spend some time researching them, and then share what I’ve found. I’m going to investigate various strategies, ratios, indicators, portfolios, and general market concepts with the goal of determining which ones are just noise and which ones might help you get ahead.
This is the first in a series I’m calling Ratio Review where I will be taking a deep dive into various popular fundamental metrics such as price to earnings, price to book, and return on assets. I will start by giving a brief description of how you calculate the metric, followed by how it is typically used, followed by how it should be used, and most importantly, if it gives you any kind of advantage when selecting stocks. Let’s kick this off by talking about arguably the most popular fundamental ratio out there – price to earnings.
#What is P/E? Let’s say a company’s stock costs 10 dollars, that there are 100 shares in existence, and that the company earned a total profit of 50 dollars this year. The price to earnings ratio, or P/E ratio, is calculated by dividing the current share price by a company’s earnings per share. Well, what is earnings per share you now ask. Earnings per share is calculated by taking a company’s profit and dividing it evenly amongst all shares. The earnings, when divided by the number of shares, results in 50 cents of profit a piece. Now to calculate the P/E ratio you simply divide the price by this number, which is 10 divided by 0.5, which results in a P/E of 20.
So, is 20 good? Bad? It’s complicated!
#Is P/E useful? If you’ve ever looked at any article, video, or strangers comment on the internet that’s talking about the price to earnings ratio you will almost always hear the same thing. BUY when the P/E is low, AVOID when P/E is high. This is by far the most common discourse and unfortunately is a great oversimplification.
Some sources you’ll see will take this one step further to say that you should buy stocks with a low price to earnings ratios within their own sector, because different sectors have naturally different average P/E ratios. For example, the financial sector currently has an average P/E of about 23 whereas the technology sector currently has an average of about 37. This is a big step up from the las
... keep reading on reddit ➡#Introduction The world of finance is absolutely filled with people making claims about what’s good or bad, how you should or shouldn’t do something, and what you can and can’t achieve. My goal is to take a look at these claims, spend some time researching them, and then share what I’ve found. I’m going to investigate various strategies, ratios, indicators, portfolios, and general market concepts with the goal of determining which ones are just noise and which ones might help you get ahead.
This is the first in a series I’m calling Ratio Review where I will be taking a deep dive into various popular fundamental metrics such as price to earnings, price to book, and return on assets. I will start by giving a brief description of how you calculate the metric, followed by how it is typically used, followed by how it should be used, and most importantly, if it gives you any kind of advantage when selecting stocks. Let’s kick this off by talking about arguably the most popular fundamental ratio out there – price to earnings.
#What is P/E? Let’s say a company’s stock costs 10 dollars, that there are 100 shares in existence, and that the company earned a total profit of 50 dollars this year. The price to earnings ratio, or P/E ratio, is calculated by dividing the current share price by a company’s earnings per share. Well, what is earnings per share you now ask. Earnings per share is calculated by taking a company’s profit and dividing it evenly amongst all shares. The earnings, when divided by the number of shares, results in 50 cents of profit a piece. Now to calculate the P/E ratio you simply divide the price by this number, which is 10 divided by 0.5, which results in a P/E of 20.
So, is 20 good? Bad? It’s complicated!
#Is P/E useful? If you’ve ever looked at any article, video, or strangers comment on the internet that’s talking about the price to earnings ratio you will almost always hear the same thing. BUY when the P/E is low, AVOID when P/E is high. This is by far the most common discourse and unfortunately is a great oversimplification.
Some sources you’ll see will take this one step further to say that you should buy stocks with a low price to earnings ratios within their own sector, because different sectors have naturally different average P/E ratios. For example, the financial sector currently has an average P/E of about 23 whereas the technology sector currently has an average of about 37. This is a big step up from the las
... keep reading on reddit ➡I'm reading a book about some stock basics, and it is explaining the P/E Ratio. It mentioned that P/E Ratio considered as an indication of approximately how many years till an investor will receive their money back. As example if the share price is $20, and the annual earning per share is $1, then the investment will be paid in 20 years. My question is related to the below phrase: "A low /E Ratio could mean the company is in extreme trouble and could be facing liquidation". Why is that? If the investment is being paid in few years, I think this should be a good choice, not the opposite.
The book is: The Share Trader's Handbook the book
#Introduction The world of finance is absolutely filled with people making claims about what’s good or bad, how you should or shouldn’t do something, and what you can and can’t achieve. My goal is to take a look at these claims, spend some time researching them, and then share what I’ve found. I’m going to investigate various strategies, ratios, indicators, portfolios, and general market concepts with the goal of determining which ones are just noise and which ones might help you get ahead.
This is the first in a series I’m calling Ratio Review where I will be taking a deep dive into various popular fundamental metrics such as price to earnings, price to book, and return on assets. I will start by giving a brief description of how you calculate the metric, followed by how it is typically used, followed by how it should be used, and most importantly, if it gives you any kind of advantage when selecting stocks. Let’s kick this off by talking about arguably the most popular fundamental ratio out there – price to earnings.
#What is P/E? Let’s say a company’s stock costs 10 dollars, that there are 100 shares in existence, and that the company earned a total profit of 50 dollars this year. The price to earnings ratio, or P/E ratio, is calculated by dividing the current share price by a company’s earnings per share. Well, what is earnings per share you now ask. Earnings per share is calculated by taking a company’s profit and dividing it evenly amongst all shares. The earnings, when divided by the number of shares, results in 50 cents of profit a piece. Now to calculate the P/E ratio you simply divide the price by this number, which is 10 divided by 0.5, which results in a P/E of 20.
So, is 20 good? Bad? It’s complicated!
#Is P/E useful? If you’ve ever looked at any article, video, or strangers comment on the internet that’s talking about the price to earnings ratio you will almost always hear the same thing. BUY when the P/E is low, AVOID when P/E is high. This is by far the most common discourse and unfortunately is a great oversimplification.
Some sources you’ll see will take this one step further to say that you should buy stocks with a low price to earnings ratios within their own sector, because different sectors have naturally different average P/E ratios. For example, the financial sector currently has an average P/E of about 23 whereas the technology sector currently has an average of about 37. This is a big step up from the las
... keep reading on reddit ➡So im currently learning to understand how to find a stocks intrinsic value and what i've read is that a stocks true value is = to there P/E ratio which makes sense in some cases not all, can some one give me a breakdown to help me understand and/or give me two different examples of how its P/E ratio is the true stock price?
