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)
Manish
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.
Nov 01 2013 11:23 AM
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.