The Intelligent Investor Audiobook

A reduced P/E shows the potential for relatively high revenues in the future, consequently generating a greater supply price. For example, a P/E of only 8 is frequently an excellent indication for a stock that needs to be scrutinized because the return can be expected to be high 1/8 = 12.5% return. Similarly, if the P/B is less than 1, or simply puts if the capitalist should pay less than $1 for $1 in internet possessions, this company could extremely well be of interest.