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    Question: how come some low p/e stocks that maintain or grow earnings don’t produce anywhere near the results their p/e would suggest?

    @salamseh Hmm my economist dad says you can only engineer earnings in the short term, not the long term. That makes sense to me. So how come some companies have very low p/e’s long term? Won’t that CapEx be depreciated as earnings loss? So if they need so much capEx it will harm earnings.
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    Question: how come some low p/e stocks that maintain or grow earnings don’t produce anywhere near the results their p/e would suggest?

    @cravinmaven Yes, a loss in book value (from a building blowing up) is reflected in earnings. https://www.investopedia.com/terms/b/book-value-reduction.asp# That building you mention if it’s fully amortizised it would have no book value. If a building has a real value but no book value that...
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    Question: how come some low p/e stocks that maintain or grow earnings don’t produce anywhere near the results their p/e would suggest?

    @cravinmaven Don’t feel like this answers my question well🤷‍♂️. Earning is the main driver of the stock price isn’t it? And if their building blows up that should be reflected in earnings and they would earn nothing in your example i’m pretty sure.
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    Question: how come some low p/e stocks that maintain or grow earnings don’t produce anywhere near the results their p/e would suggest?

    @pastorjeremylove Aren’t these CapEx given a fair value, that then gets depreciated as an earnings loss? Shouldnt they be reflected in earnings?
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    Question: how come some low p/e stocks that maintain or grow earnings don’t produce anywhere near the results their p/e would suggest?

    @esper PE does account for capital expenditures by assigning a «fair» value to your expenditure and decreasing the value with time. Meanwhile free cash flow and such regards a capital expenditure as a waste of money when it isn’t, but on the other hand it should lead to higher fcf in the future...
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    Question: how come some low p/e stocks that maintain or grow earnings don’t produce anywhere near the results their p/e would suggest?

    The main example of this are car makers (oil, utilities, shipping might also be examples). These car makers in the long term maintain or grow their earnings, yet you could have bought them many years ago at a p/e ratio of 5, and with dividends reinvested would have gotten like 10% per year, not...
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