Valuation of Companies using PE

Using Historical PE, Growth and Dividends to determine the expected returns.

PE Models are simple. Two key assumptions underpin the model, firstly that current prices are a function of current earnings and secondly that historical earnings, growth rates of earnings and P/E ratios offer a good way to anticipate future stock earnings and stock prices. In the model, we have the Historical Earnings, EPS and Dividends of 1500 companies of the Russel 3000. Current Earnings, historical growth rates in Earnings and Dividends and Median P/Es of the last 10 years are used to project the returns in 10 years.