1

Consider the historical P/E ratio of Prosus N.V. ADR (OTC markets: PROSY):

PROSY historical P/E chart - YCharts

(source: https://ycharts.com/companies/PROSY/pe_ratio)

PROSY historical P/E chart - Gurufocus

(source: https://www.gurufocus.com/stock/PROSY/data/pe-ratio)

Observations:

  • At the end of March 2021, the P/E ratio to suddenly dropped from 40+ to around 25.
  • At the end of September 2021, the P/E ratio suddenly dropped from 15+ to less than 7.

As far as I can tell, there was no abrupt change in the stock price over the past year:

Google PROSY

(source: Google)

What happened in the first and third quarters of 2021 that cause the P/E ratio to drop sharply?

1 Answer 1

1

Observations:

  • At the end of March 2021, the P/E ratio to suddenly dropped from 40+ to around 25. -At the end of September 2021, the P/E ratio suddenly dropped from 15+ to less than 7.

As far as I can tell, there was no abrupt change in the stock price over the past year:

So if P/E made a big move, but the price (p) didn't make a big move; that means that earnings (E) made a big move.

For example if price is $100 and earnings is $2.5 then P/E is 40. But if the earnings go to $4 but the price doesn't change the P/E drops to 25.

In reality there was a change in both P and E which resulted in the P/E moving from 40 to 25.

from the website you linked to:

The price to earnings ratio is calculated by taking the current stock price and dividing it by the most recent trailing twelve-month earnings per share (EPS) number. The data is updated every 20 minutes during market hours.

you should expect jumps when Price is updated every 20 mintes, but Earnings updated every 3 months.

The clue was that the jumps occur quarterly.

2
  • What is the cause of the jump in earnings that did not move the price, leading to a lower and lower P/E ratio?
    – Flux
    Feb 10, 2022 at 13:45
  • Maybe everybody knew what the jump was going to be and the jump was already factored into the price. Feb 10, 2022 at 13:54

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .