Low price-earnings ratio effect(redirected from Low Price/Earnings Ratio Effect)
Low price-earnings ratio effect
The tendency of portfolios of stocks with a low price-earnings ratio to outperform portfolios of stocks with high price-earnings ratios.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
Low Price-Earnings Ratio Effect
A phenomenon whereby stocks with low price-earnings ratios tend to perform better than stocks with high price-earnings ratios. The low price-earnings ratio effect occurs because stocks with low price-earnings ratios are often undervalued, and their prices eventually rise.
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