Why are the PE multiples for a company in London stock exchange different that of the PE multiple of the same company in the New York Stock exchange?



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Why are the PE multiples for a company in London stock exchange different that of the PE multiple of the same company in the New York Stock exchange?

2 Answer(s)


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The PE/E multiple which is PE/E is nothing but the stock price of the company divided by the

earnings per share of the company. Now the stock price of the company differs based on which

exchange you are calculating a dollar. For example Google might be trading at $700 a share on

one exchange but the Google is also listed in some other exchange, it might be trading at

slightly higher or lower than the $700.

So because of these different prices, the numerative of the formula PE by E will change the PE

will change based on which stock exchange you are referring to and, hence, the PE multiple

and, hence, if PE changes and if earnings remain the same which it will be, your PE ratio

changes. And hence, the same company will have different stock prices based on where it is

listed.

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