If you are asking how much of future growth is embedded in the current price, then in my limited understanding, P/E does not reflect that. Even with businesses with proven business models and success, P/E can give wrong signals. Visible growth, TAM huge, P/E reaches great heights, sustains for a few quarters, defying all logic, but it comes down, for reasons pertaining to the business of course. The aspects that are not excluded before, or overlooked, are visible, and P/E crashes, even if there is earnings growth. So, better to have an eye on the price too, before having bigger positions, if the stock is trading at very high valuations.
| Subscribe To Our Free Newsletter |
