314 | Is My Company's Stock Overpriced? | P.E. Ratio Explained

<div class= "elementor-element elementor-element-15da9379 elementor-widget elementor-widget-theme-post-content" data-id="15da9379" data-element_type="widget" data-widget_type= "theme-post-content.default"> <div class="elementor-widget-container"> <ul> <li>The Households of FI series continues! In this episode, we touch base with Kristi, the single mom from Minnesota who. New to FI, Kristi is working to get on the path but has questions about her company’s Price-to-Earnings (P/E) Ratio and the Employee Stock Purchase Plan (ESPP).</li> <li>How to evaluate what a company’s stock is worth is not something many of us index fund investors know a lot about, but it’s good to be familiar with it. Individual stock selection is something that Brian Feroldi gets excited about, making him the perfect mentor for Kristi and her ESPP questions.</li> <li>The only individual stock Kristi owns is her company’s stock. She is able to buy her company’s stock for a 15% discount with up to 10% of her income.</li> <li>She has been buying this stock since beginning her career six years ago and has accumulated a lot of it. Because she didn’t know anything about investing prior to finding the FI community, she nows calls this her biggest financial mistake and has finally started selling a bit of it.</li> <li>She originally thought that sell the stock with the lowest cost basis to realize the largest gain would be the best strategy, but now questions if that is the best move.</li> <li>Brian says a lot of publicly-traded companies offer ESPP, like Kristi’s. Company plans vary somewhat, and it sounds like her company purchases lots of the stock on a monthly basis at the end of the month.</li> <li>As long as Kristi holds the stock for two years, the 15% discount is taxed as ordinary income, and capital gains are taxed as long-term capital gains.</li> <li>Discounted stock sounds like a great deal, but Kristi has a lot of risk tied to her company. Her salary, bonus, retirement plan, benefits, and career capital all rely on the company. Purchasing