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Calculate if a stock’s price reflects its market cap

  • A video that explains this
    • The 10th minute
  • P/E – Price per earning, let’s assume all compatitors for the same stock, has a value of 30.
    • Meaning Earning X 30 = Market cap.
  • Market cap / (P/E) = Expected earning
  • If the company to analyze, earns less then that company might not be so effective in terms of making money, or doesn’t worth the stock price.