Outstanding Investor Digest



Home




Subscriber Areas


Audio Archives
Client Letters
OID Features Online
OID.com Exclusive
Features


Indexes:
Investors
Funds et al.
Companies &
Investments




Contact Us

About Your
User Name
& Password



Guest Areas


Free Reprint

Online Excerpts

Investors in
Our Latest Edition


Companies &
Investments in
Our Latest Edition




About OID
Subscribe
Online Advertising
Online Classifieds

Employment
Opportunities




TWEEDY, BROWNE COMPANY L.P.
What Has Worked in Investing
(continued from preceding page)


Table 35:
Average Values of Price to Book Value, Price/Earnings Ratio and Stock Price for Ten Equal-Number Groups of New York Stock Exchange Listed Firms Constructed on the Basis of Increasing Price to Book Values (1964-1982)


Price/Book
Value Group

1 (Lowest)

2

3

4

5

6

7

8

9

10 (Highest)

Average
Price/Book
Value Ratio

0.52

0.83

1.00

1.14

1.29

1.47

1.71

2.07

2.80

7.01

Average
Price/Earnings
Ratio


16.7x

9.1

9.1

9.1

10.0

10.0

11.1

11.1

14.3

20.0

Market
Capitalization
(Millions)


$217.1

402.5

498.6

604.7

680.2

695.6

888.9

872.6

1099.2

1964.3

Average
Stock
Price


$20.09

22.97

25.08

27.79

28.97

31.55

36.07

37.84

44.80

60.09


As Table 35 indicates, lower price to book value ratios were associated with lower price/earnings ratios, smaller market capitalizations and lower stock prices.

Donald Keim, in Earnings Yield and Size Effects: Unconditional and Conditional Estimates examined price/earnings ratio and market capitalization for the period from March 31, 1951 to December 1986 for all New York and American Stock Exchange listed companies with a December 31 fiscal year, including all such companies which had been sold, merged or declared bankrupt. Each March 31, all of the culled companies were ranked according to price/earnings ratio and sorted into deciles. The annual investment returns, average price/earnings ratio and average market capitalization for each of the ten groups are presented in Table 36.

Page 39 of 42

Page: 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13
14 | 15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 | 23 | 24 | 25 | 26 | 27
28 | 29 | 30 | 31 | 32 | 33 | 34 | 35 | 36 | 37 | 38 | 39 | 40 | 41 | 42

(Return to Table of Contents)

(continue to the next page)



©Copyright 1996-2010 Outstanding Investor Digest, Inc. All rights reserved.
295 Greenwich St., Box 282, New York, NY 10007 (212) 925-3885