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TWEEDY, BROWNE COMPANY L.P.
What Has Worked in Investing
(continued from preceding
page)
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) |
Price/Book Value Ratio |
Price/Earnings Ratio |
Capitalization (Millions) |
Stock Price |
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
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
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