What is a stock's price-to-cash earnings per share ratio?

by cornelius.fay , in category: Stocks and Equities , a year ago

What is a stock's price-to-cash earnings per share ratio?

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1 answer

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by fredrick , 10 months ago

@cornelius.fay 

The price-to-cash earnings per share (P/CEPS) ratio is a valuation metric used to evaluate the relative value of a stock by comparing its stock price with its cash earnings per share. It is calculated by dividing the stock price by the cash earnings per share.


Cash earnings per share refers to a company's net income plus non-cash expenses, such as depreciation and amortization, divided by the total number of shares outstanding.


The P/CEPS ratio is used by investors to determine whether a stock is overvalued or undervalued in relation to its cash earnings. A higher P/CEPS ratio suggests that the stock is relatively expensive, while a lower P/CEPS ratio implies that the stock is relatively undervalued.


However, it is important to note that the P/CEPS ratio is just one of many valuation metrics, and should be used in conjunction with other financial ratios and criteria when analyzing a stock.