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	ZweigWhite Perspectives - Checking in on and looking into 2005 - Focus on Ownership Transition
		The P/E multiple is the price at which the stock is trading relative to the companies' earnings per share and NFY P/E is the price at which the stock is trading relative to the companies' projected earnings per share for the NFY.
		When we compare the one year and the terminal growth rates of earnings for each of the companies last year to what is estimated this year, on average, the difference is slight.
		The growth in earnings implied by the P/E ratios of the public firms examined was very high in 2004, but the companies did not meet those expectations and saw their value negatively affected.
	www.zweigwhite.com /perspectives/perspective.asp?pageid=334 (1241 words)

	TheStreet.com: Cramer on Price-to-Earnings Multiples
		On future earnings estimates Mister Softee is still expensive.
		Arguably BS might be selling at 4 times earnings.
		I am trying to peer forward and see what may be cheap on year 2000 numbers, not what was cheap on 1996 earnings.
	www.thestreet.com /comment/wrongtactics/13009.html (551 words)

	Drug Delivery Technology - Article Index
		Pricing multiples are examined for each of the companies of the group, and average or median statistics are generated as being representative for the sector.
		These multiples are then applied to the financial performance of the firm of interest to establish a range of value for the company.
		Companies trading at multiples of around 1.5 or less are perceived to be poor performers and are being valued primarily on the assets of the company.
	www.drugdeliverytech.com /cgi-bin/articles.cgi?idArticle=26 (1316 words)

	TheStreet.com: Better Earnings, Worse Multiples
		But the disastrous collapse in corporate earnings that has taken place over that time span has resulted in a price-to-historical earnings multiple that makes these lower prices look like anything but bargains.
		Earnings comparisons over the year ahead should look pretty good against the numbers that have been reported over the year behind.
		In the last cyclical upswing, an acceleration in top-line revenues led, through "operating leverage," to a boom in bottom-line earnings, which led on to an explosion in market returns as multiples expanded due to a confluence of favorable factors.
	www.thestreet.com /comment/jamesgriffin/1510516.html (1070 words)

	Multiple choice - Jun. 9, 2004
		That's well below the 40-something multiples at the peak of the late 1990s bubble, according to data compiled by Yale economist Robert Shiller, author of "Irrational Exuberance," but matches the levels in 1966, at the peak of the 1950-1966 bull market and in 1995, just three years before the peak of the 1982-1998 bull market.
		"Earnings are likely to continue to become more favorable, and I believe that will counteract the negative effect of rising rates to provide for higher stock valuations by year-end," said Robert Balentine, CEO of Balentine & Co., a money management firm in Atlanta.
		To be sure, earnings estimates continue to ratchet upwards, with the consensus estimate for 2004 S&P 500 earnings climbing recently to a record $68.42, according to earnings tracker First Call, an estimate that's jumped by about $4 in just the past month.
	money.cnn.com /2004/06/09/markets/multiples/index.htm?cnn=yes (861 words)

	Interview with the Authors
		But short-term earnings are not very helpful for gauging expectations because they are a poor proxy for how the market values stocks.
		Another shortcoming is that earnings exclude the incremental investments in working capital and fixed capital needed to support a company’s growth.
		The only investors who earn superior returns are those who correctly anticipate changes in a company’s competitive position (and the resulting cash flows) that the current stock price does not reflect.
	www.expectationsinvesting.com /interview.shtml (1735 words)

	earnings multiple Definition
		The most common measure of how expensive a stock is. The earnings multiple is equal to a stock's market capitalization divided by its after-tax earnings over a 12-month period, usually the trailing period but occasionally the current or forward period.
		The higher the earnings multiple, the more the market is willing to pay for each dollar of annual earnings.
		The last year's earnings multiple would be actual, while current year and forward year earnings multiple would be estimates, but in each case, the "P" in the equation is the current price.
	www.investorwords.com /1621/earnings_multiple.html (315 words)

	[No title] (Site not responding. Last check: 2007-10-24)
		Use of multiples of earnings or revenue in determining the fair value of a reporting unit may be appropriate for example, when the fair value of an entity that has comparable operations or economic characteristics are observable and the relevant multiples of the comparable entity are known.
		In some cases, a simple multiple of earnings may actually be the most appropriate method where in other cases, “deleveraging” of capital prior to applying multiples may be more reflective of the true value of the company.
		Those multiples incorporate the shareholder perspective absent from mutual transactions and the “takeover premium” to shareholders imputed from a subsequent sale to another institution (which is not possible for a mutual institution).
	acbankers.org /government/scripts/government_view_comment.asp?ID=782 (1818 words)

	What is my business worth? (Site not responding. Last check: 2007-10-24)
		But, even if we settle on an earnings multiplier, we are not even able to start the valuation process until we decide which earnings figure we are going to multiply.
		At the 8% rate, for someone to earn the same $86,500 per year that the magic amusement machine earns, an investment of $1,081,250 ($1,081,250*8%= $86,500) would be required.
		This $38,500 excess earning number is typically multiplied by a factor of 2 to 5, based on such factors as the level of risk involved in the business, the attractiveness of the business and the industry, competitiveness, and growth potential.
	maine.bizxc.com /Sellers/Rs_BusinessWorth.asp (3785 words)

	[No title]
		Examples of these valuation multiples include price/earning multiples (also known as P/E ratios, this method, which compares a company's market capitalization to its annual income, is the most commonly used multiple) EBITDA multiples, and others.
		When using this method, you look at what multiples are used for other companies in the industry.
		The numbers used for EBITDA or earnings might be figured for the 12 months trailing (the previous 12 months), the last fiscal year, 12 months projected, or the next fiscal year projected.
	web.mit.edu /course/15/15.402ab/CompsMulti.doc (565 words)

	The G-31 Fund
		Earnings are too easily manipulated by unscrupulous accountants and managers, and they do not paint an accurate picture of a company's cash-generating potential.
		Multiples: There are many kinds of multiples used by analysts to value companies: price-to-earnings (P/E), price-to-sales, price-to-book, and so on and so forth.
		For example, a 10 forward P/E multiple means that the market is willing to pay $10 for every $1 of the company's earnings next year.
	www.g31fund.com /glossary.asp (956 words)

	2002 REIT outlook, 2002 REIT investment outlook
		More importantly, price to earnings multiples remain close to their all time lows.
		"As the economy weakened, corporate earnings slumped and uncertainty spread, investors took refuge in REITS because of their high dividends yield and the perception that earnings growth for this defensive asset class would prove somewhat resilient in an economic downturn," said Morrill.
		On a relative multiple basis, REITs currently trade at a forward AFFO multiple of 10.4 versus an earnings multiple of 24.3 for the SandP 500.
	www.rebuz.com /research02/0202/2002_REIT_outlook.htm (1187 words)

	Financial Management 12/02
		Acquisition multiples have also risen as a result of added demand coming from financial institutions seeking to grow their property/casualty operations through agency acquisitions.
		The result of all this pressure is acquisition multiples of earnings in the range of six to eight and sometimes higher.
		This represents a dramatic increase from the five to six multiples of earnings paid by acquirers prior to the beginning of the current hard market.
	www.roughnotes.com /rnmagazine/2002/december02/12p88.htm (1147 words)

	Businesss in MaineToday.com \| Maine Business Brokers Network
		The key to understanding a business earnings multiple approach is to understand the earnings definition used.
		But, if we use this definition, then, in most cases, the multiple is 3 to 5, depending on which of the two earnings definitions we employ.
		This validates using an earnings multiple of projected EBIT, as long as the buyer agrees that the projection is realistic.
	business.mainetoday.com /smallbusiness/brokernet/buy/earnings.shtml (1272 words)

	Yale School of Management Faculty: Jacob Thomas
		We also find that forward P/E ratios are related to the volatility of reported earnings: both lower cash flow volatility and the reduction in volatility due to accruals that convert cash flows to reported earnings are associated with higher P/E ratios.
		Even though reported earnings volatility does not appear in the relation derived for forward P/E ratios, we find an indirect connection: firms with lower cash flow volatility and greater earnings smoothing due to accruals are strongly associated with higher growth forecasts (the links with lower risk are not as clear).
		Since we require analysts' earnings and growth forecasts and positive values for all measures, our results may not be representative of the many firm-years excluded from our sample.
	www.som.yale.edu /Faculty/jkt7/papers.htm (3019 words)

	ZweigWhite - Focus on Ownership Transition - An insight into 2004 and beyond -
		The P/E multiple is the price at which the stock is trading relative to the companies' earnings per share, and NFY P/E is the price at which the stock is trading relative to the companies' NFY earnings per share.
		Over the next year, the SandP earnings are projected to grow 13.3%, and in the long run SandP earnings are projected to grow 6.6%.
		Along with the high earnings projections, investors have assigned a higher degree of risk of the company's ability to achieve its growth rates.
	www.zweigwhite.com /perspectives/persp-print.asp?pageid=224 (1365 words)

	Canadian Stocks - QIS Capital Corporation
		They recognize that future earnings are unlikely to be as strong, and accordingly, adjust the price of the stock to reflect a normalized earnings picture.
		If a company’s future earnings streams are at all in question, the market will discount its stock price to a valuation level that it feels more comfortable with based on very conservative future expectations.
		Companies that have a low p/e multiple may have a considerable level of dilutive factors such as outstanding (unexercised) stock options and/or warrants, or a significant amount of convertible debt.
	www.qiscapital.com /showpage.php?article_id=4 (769 words)

	Agency Financial Management 12/00
		While many readers have heard of multiples being applied to the agency's sustainable cash flow of five to seven times, many are confused as to the origin of those multiples.
		Public broker multiples are presented in financial publications based upon after-tax earnings.
		Public broker multiples may or may not be subject to the application of a minority discount.
	www.roughnotes.com /rnmagazine/2000/december00/12p44.htm (937 words)

	[No title]
		He said the return on common stocks has three sources: dividends, earnings growth and changes in how much an investor will pay for a dollar of earnings.
		Earnings growth and dividends, he added, usually run around 10 percent.
		Sources: Yield is current SandP 500 rate; earnings growth long-term average is 7 percent; change in P/E assumes no change or back to long-term average.
	uexpress.com /printable/print.html?uc_full_date=20010909&uc_comic=sb (693 words)

	SSRN-Discretionary Accruals, Earnings Management and the Valuation of Earnings by Anwer Ahmed
		This study investigates how discretionary accruals affect earnings valuation (or price-earnings) multiples to provide indirect evidence on whether managers use their discretion over accruals to communicate their private information or to obtain private benefits.
		I find that earnings multiples are significantly higher when earnings contain large income increasing discretionary accruals than when earnings contain small discretionary accruals.
		The study (i) extends the literature on earnings multiples, (ii) suggests that effects of discretionary accruals depend on the context in which they are reported, and (iii) suggests that reduction of managerial discretion via accounting standards is costly because it eliminates the opportunity to communicate.
	papers.ssrn.com /sol3/papers.cfm?abstract_id=2692 (258 words)

	Abby Ignores Ominous P/E Patterns
		The historical danger of escalating earnings multiples has been that earnings increases do not reflex the P/E average back to the median.
		Firstcall predicts the SandP 500 will post an earnings decline of 4.3% in first quarter this year, a decline of 2.2% in the second quarter, and a meager gain of 5.4% in the third quarter.
		Most bulls had justified record earnings multiples in U.S. equities because record economic growth was thought to be never ending.
	www.gold-eagle.com /editorials_01/willettalway031201.html (700 words)

	The Big Picture: Earnings or Multiple Expansion?
		During the 1950s, earnings grew less than 4% a year, yet that was one of the best decades for stock-price performance.
		The 1970s saw the fastest earnings growth in the past 55 years, but that was the worst decade for investors in the stock market.
		The average rate of earnings growth clusters around 6% a year, reflecting growth in the economy which tends to average 3% to 4% per year.
	bigpicture.typepad.com /comments/2005/08/earnings_or_mul.html (1464 words)

	Valuation of Private vs. Public Firms (Site not responding. Last check: 2007-10-24)
		Therefore, the profitability of a private firm may require restatement in order for it to be directly comparable to that of a public firm.
		In addition, public-company multiples are generally calculated from net income (after taxes), while private-company multiples are often based on pre-tax (and many times, pre-debt) income.
		This is another reason why private-company multiples are generally based on pre-tax profits and may not be directly comparable to the price/earnings ratio of public firms.
	entrepreneur.com /pennysaver/PS_SegArticle/0,4891,290784-----,00.html (706 words)

	Business Valuation Multiples Secrets \| Business Valuation Multiples Portal (Site not responding. Last check: 2007-10-24)
		Earnings multiples come from small business transaction databases that were created and which have grown increasingly.
		A multiple of the cash flow that is expected in year six or 11 is used to represent these latter cash flows.
		Finally, other cash flows that are required to generate expected earnings include expenditures for capital asset additions and additional working capital needed to fund expanded operations.
	www.businessvaluation411.info /business-valuation-multiples.html (1114 words)

	Lang Asset Management - Profit Decline
		As the market struggles to maintain current levels, companies are increasingly challenged to deliver earnings that justify their lofty stock prices.
		Due to the market's historic over-valuation, prudent investors are looking to protect their assets from the consequences of a protracted bear market, and in fact, to capitalize on this opportunity.
		The current earnings multiple based upon reported (GAAP) estimated SandP 500 earnings is over twice its historical average.
	www.langasset.com /profitdecline.htm (872 words)

	Price-earnings multiples -- Another valuation mark-down?
		One critical change that came about in the last few years is a change in the valuation level of Sensex stocks.
		Over the years, investors have tended to pay a lower premium for a unit of corporate per share earnings, as is reflected in the relatively lower price-earnings ratio (P/E) in successive boom phases.
		The accompanying graphs, one of Sensex daily closing values over ten years and the other of the daily Sensex P/E ratio, suggest that, over time, the market has changed significantly vis-a-vis the extent of premium investors are willing to pay for a company's earnings.
	www.thehindubusinessline.com /iw/2000/05/21/stories/0821h011.htm (1776 words)

	Cash Flow for Baby Boomers - Print Version
		EBIT is short for "Earnings Before Interest and Tax" and is usually thought of in terms of "adjusted, maintainable Earnings" - ie Earnings before non recurring income or expenditure; and before Management BS.
		It is possible to artificially inflate earnings by running the business lean, but what happens is that the infrastructure starts to fray at the edges - thereby increasing the need for capex.
		The reason most small business sell for low multiples is that they have high associated risks of failure; and these high risks require a combination of hands-on management and entrepreneurial skill to address.
	www.gold-eagle.com /editorials_04/bloom061304pv.html (2697 words)

	Infosys narrows gap with Wipro on price-earnings multiples- The Economic Times (Site not responding. Last check: 2007-10-24)
		Wipro commands a price-earnings multiple (P/E) of 37 for earnings reported for the financial year ended March ’02.
		Infosys Technologies has a price-earnings multiple of 32 as it closed at Rs 3,844 on Friday.
		Three months back, the stock was trading at Rs 3,188, 26 times its earnings per share as of March 31, ’02.
	economictimes.indiatimes.com /cms.dll/articleshow?artid=25597853 (453 words)

	Vince Farrell warns investors to be careful - May 5, 1998
		NEW YORK (CNNfn) - The remarkable rally on Wall Street, with stock prices climbing far beyond the traditional benchmark of earnings multiples, is leaving some analysts at a loss for a solid explanation, but at least one market watcher says that the days of the price-earning valuation might not be over yet.
		Now, you can put a very high multiple on earnings if interest rates stay low.
		I think that with the value of the dollar and the depressed currencies overseas, we are going to have a tough time with our trade balance and earnings for multinationals are going to be problematic throughout the rest of the year.
	money.cnn.com /1998/05/05/investing/farrell_intv (910 words)

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