This year, the price-earning ratios at companies listed at BSE recovered a portion of the 2008 losses, the earning multiples doubling on mounting volumes and trading values over the past three months.
Positive PER compared to regional market
This year started under the auspices of strong bearish sentiment in stock investing in 2008, when BET and BET-C indices of the regulated market at BSE slumped 70% while the indice that measures the performance of the five financial investment companies (BSE:FIC) plummeted 83%.
Early last year, the market’s price earning ratio was in the range of 19, while in early 2009, the multiple was 77% lower, down to 4.21. In the same period, the BSE’s market cap halved to 11.8 billion euros, from 23.6 billion euros.
After first two months and a half this year, when indices were in a constant freefall and the liquidity was dried up, the March bullish rally lifted volumes and trades’ value and restored investors’ confidence.
In early June, earnings multiples of companies listed at BSE were hovering around 8.81, up 47%.
“Compared to stock markets in the region, and to previous years’ values, BSE has a good PER, due to the aggressive depreciation of quotations. Now we are witnessing price/earning ratios that were unthinkable few years ago”, Paul Brendea, analyst at Prime Transaction broking firm told Wall-Street.
According to last week statistics, earning multiples were in the negative territory at 26 companies, such as Rompetrol Rafinare (BSE: RRC), Banca Comerciala Carpatica (BSE: BCC), Broker Cluj (BSE: BRK), Flamingo International (BSE: FLA), Amonil (BSE: AMO), and Azomures (BSE: AZO).
PER or P/E ratio is used by the majority of traders to determine stocks to trade. The indicator is a measure of the price paid for a share relative to the annual net income or profit earned by the issuer per sha
