One continuing area of debate is how important price-to-earnings valuations are for stocks. The forward P/E ratio of the benchmark S&P 500 Index SPX,
was 20.9 at the close on Dec. 2, based on weighted consensus estimates among analysts polled by FactSet. That was on the high side — the average forward P/E for the index has been 18.7 over the past five years and 16.8 for 10 years.
But some stocks of rapidly growing companies trade at much higher valuations. In the case of Amazon.com Inc. AMZN,
P/E ratios have averaged 101.7 over the past 20 years and are now valued at 67.5 times forward earnings, with investors’ confidence springing from by a continual rapid increase in revenue.
But any hint of a sales slowdown can cause a highflier to plunge.
The company reported adjusted earnings and sales for its fiscal third quarter ended Oct. 31 that were higher than analysts’ consensus estimates. So what was the problem? DocuSign CEO Don Springer said that after six quarters of “accelerated” sales growth, its customers had returned to “more normalized buying patterns.” The company’s billings — not sales, but future sales under contract — had come in lower than expected.
Women and men often want the same things when it comes to deciding where to live, however, their preferences can vary when it comes down to selecting cities. Amanda Weinstein, an associate professor of economics at the University of Akron and Lockwood Reynolds, an associate professor of economics at Kent State University, share the results of their research into these differing thought patterns.
Must you play it safe when investing for retirement?
Jacob Passy writes The Big Move column, which tackles housing-related problems. This week, he helps a reader who asks if she has “squatter’s rights” to a home she has lived in for 30 years, even though her ex-husband is a half-owner who wishes to sell the property.
A holiday warning
Many retailers offer to allow shoppers to “buy now and pay later,” often with terms that appear to be free of charge. But it is best not to assume you know all the pitfalls. Katherine Wiles looks at various types of deals and describes how easy it is for shoppers to get in over their heads.
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