OREANDA-NEWS. June 05, 2015. The price-earnings (P/E) ratio shows what price investors are willing to pay for every dollar the company earns. For example, a share price of \\$2.00, with reported earnings of 20 cents per share over a year, would indicate investors are happy to pay a P/E ratio of 10 times.

A high P/E ratio can be seen as indicating an expensive share price relative to earnings, while a low P/E ratio can be interpreted as a cheap share price relative to earnings. Note that just as earnings tell part of the story of a company’s financials, the P/E ratio also provides partial information on a company’s valuation. Aside from net income, companies also report on net assets and net cash flows, which can be measured via price-to-book and price-to-cash ratios.

P/Es can be calculated on a forward estimate or historical basis. In SGX StockFacts, the historical approach is used and based on normalised diluted earnings per share (EPS). Normalised diluted EPS is the company’s normalised net income divided by the diluted weighted average shares outstanding.   

Example

Consider the following example using DBS Group Holdings:

DBS Group Holdings  P/E Ratio   =             Share Price / Normalised Diluted Earnings Per Share (EPS)

                                                            =             S\\$19.85 / S\\$ 1.621

                                                            =             12.2

Note that normalised diluted EPS is calculated using the last 12 months (LTM) of finalised earnings using a calculation as follows:

LTM = YTD + Prior FY – Prior YTD

The normalised net income of S\\$4.045 for DBS Group Holdings is based on the diluted net income for the March 2015 quarter of S\\$1.269 billion and added to the S\\$4.007 billion report for the prior 2014 Financial Year net of the S\\$1.231 billion earned in the March 2014 quarter.  This is divided by the diluted weighted average shares outstanding, to calculate the Normalised Diluted EPS.

So in this example:

Normalised Diluted EPS  =    Normalised Net Income / Diluted weighted average shares outstanding

                                               =    S\\$4.045 billion / 2.495  billion shares     

                                               =    S\\$1.621

The P/E ratios of the 30 STI stocks are tabled below. Clicking on each stock name below will bring you to the relevant the profile page on SGX Stock Facts.

Stock Code Industry Mkt. Cap.in S\\$ mm P/E

EPS

in S\\$

Price vs. High in % Price vs. Low in %
Singapore Telecommunications Limited Z74 Diversified Telecommunication Services 63,432 17.0 0.234 -13 10
Jardine Matheson Holdings Limited J36 Industrial Conglomerates 56,990 13.4 6.107 -11 6
Jardine Strategic Holdings Limited J37 Industrial Conglomerates 49,270 11.0 4.003 -15 1
DBS Group Holdings Ltd D05 Banks 49,204 12.2 1.621 -7 19
Oversea-Chinese Banking Corporation Limited O39 Banks 39,822 10.0 1.019 -8 7
United Overseas Bank Limited U11 Banks 36,211 11.5 1.971 -10 5
Hongkong Land Holdings Limited H78 Real Estate Management and Development 27,862 15.8 0.747 -1 35
Wilmar International Limited F34 Food Products 21,616 12.8 0.265 -1 16
Thai Beverage Public Company Limited Y92 Beverages 18,707 20.0 0.037 -8 22
Keppel Corporation Limited BN4 Industrial Conglomerates 15,715 8.3 1.04 -22 9
CapitaLand Limited C31 Real Estate Management and Development 14,635 13.4 0.256 -10 17
Global Logistic Properties Limited MC0 Real Estate Management and Development 13,502 20.0 0.14 -6 17
Jardine Cycle & Carriage Limited C07 Distributors 13,485 12.6 3.01 -21 2
Singapore Airlines Limited C6L Airlines 12,862 36.6 0.3 -15 15
Genting Singapore PLC G13 Hotels, Restaurants and Leisure 10,943 31.5 0.029 -33 0
Singapore Technologies Engineering Ltd S63 Aerospace and Defense 10,538 20.2 0.168 -14 8
City Developments Limited C09 Real Estate Management and Development 9,320 12.7 0.81 -6 12
Singapore Exchange Limited S68 Diversified Financial Services 8,740 26.6 0.307 -7 20
Hutchison Port Holdings Trust NS8U Transportation Infrastructure 7,697 - -0.355 -14 1
CapitaLand Mall Trust C38U Real Estate Investment Trusts (REITs) 7,549 12.1 0.181 -4 16
Sembcorp Industries Ltd U96 Industrial Conglomerates 7,271 9.8 0.416 -27 0
StarHub Ltd. CC3 Wireless Telecommunication Services 6,979 19.4 0.208 -9 1
Singapore Press Holdings Limited T39 Media 6,671 17.9 0.231 -5 2
ComfortDelGro Corporation Limited C52 Road and Rail 6,555 22.8 0.134 -6 32
Sembcorp Marine Ltd S51 Machinery 6,183 11.4 0.26 -29 4
Ascendas Real Estate Investment Trust A17U Real Estate Investment Trusts (REITs) 5,942 13.1 0.188 -9 13
Golden Agri-Resources Ltd E5H Food Products 5,491 150.5 0.003 -26 9
Noble Group Limited N21 Trading Companies and Distributors 5,021 39.7 0.019 -50 0
Olam International Limited O32 Food and Staples Retailing 4,845 29.3 0.068 -26 3
SIA Engineering Company Limited S59 Transportation Infrastructure 4,372 21.2 0.184 -24 0

Source: SGX StockFacts (Data as of 2 June 2015)

Please note that the LTM is not always derived from the sum of four consecutive quarters of data as the goal is to incorporate the most recently audited available information in the metric, and quarterly/interim results are usually unaudited. Consequently, the LTM metrics calculated by CIQ do not necessarily add up to the sum of the most recent four consecutive quarters.