TWSE reports average listed P/E ratio of 17.43
By Ted Chen, The China Post
May 7, 2014, 12:05 am TWN
TAIPEI, Taiwan -- The Taiwan Stock Exchange Co. (TWSE) yesterday announced that the shares of companies listed on the TAIEX in April recorded an average price-to-earnings ratio (P/E) of 17.43.
The figure in March stood at a more favorable 17.55, despite stellar gains recorded early in April, which saw the index breaching the 9,000-point ceiling. The TWSE explained that average P/E ratio rose in April following the slowing of trading momentum as investors took profits on the heels of recent rallies.
Despite April's month-by-month declines in P/E performance, the figures saw marked year-by-year improvements. The average P/E performance of shares listed in the non-financial, non-electronic and non-electronic, as well as non-financial sub indices in April of last year reached 23.6, 21.59 and 26.72 respectively.
The P/E ratio is a measure of a company's current share price compared to its per-share earnings, and how much investors are willing to pay per dollar of earnings. Investment analysts, however, consider excessively high P/E ratio for a company relative to industry averages a sign that its shares may be overvalued.
The P/E ratio of the TAIEX's non-financial and insurance sub index reached 18.33, the non-electronic sub index reaching 16.21, with the non-financial and non-electronic subindex reaching 17.33.
The TWSE stated that among the sectors, freight and transport recorded the highest P/E ratio at 82.14. Department stores and retailers recorded the lowest figures at around 7.28, excluding sectors that conventionally have negative P/E ratios such as the wire and cable and ceramics industries.
In addition, the TWSE stated that shares listed on the Taiwan market in April recorded an average yield rate of 3.61 percent, a slight improvement to March's 3.47 percent. April yield rates stood at 3.53 last year. Price-Book Ratio in April however, declined to 1.74 compared to the 1.75 seen in March while exceeding the 1.69 recorded in the same period last year.