Ask Colin

Where can I find a reliable PE ratio for a stock?

For major companies, it should not be too hard. Insight Trader (if up to date), AFR (allow a week or more after a profit report), Shares Magazine, Ninemsn Finance page and there are many more.

The main problem is that some sources will give historical PE (last year's actual earnings) and some will give prospective PE (next year's estimated earnings). Most of the sources I gave will give you historical PE. Brokers and analyst firms tend to give prospective ratios. If in doubt ask the source.

Another problem is large unusual items - some sources will adjust for these and others leave them in. When you get differences, you will need to look yourself at the company's financial statements.

For smaller companies and especially new companies it can be difficult to get reliable information. For new companies there may be no historical earnings to use and estimated earnings are almost useless because there is nothing to go on. You should always do your own work on them. Start at the ASX web siite and find if the company has a web site. Go there and see if they have their financial statements up for you to download. If not, phone them (get number from ASX web site or Telsta site) and ask to be sent the last annual report.

Ninemsn Finance (Aspect Financial) is a very useful site for initial work.

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