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AnYex Ji, P/E ratio do not seem to indicate any closer rate of return in many circumstances. for example, we may look at the return of Nabil, which had high P/E ratio, above 30, but it gave return much better than others stock of P/E less than 10.

Are there any methods how short term investors speculate the price of stock

your views will be highly appreciated

There is no such method to calculate "Actual Market Price" of a particular share. However there are lot of valuation conventions which try to estimate the fair value of an stock. These convention needs historical data and growth prediction based on various market information.

Different investors use different convention and come up with different estimates. Some investors just follow market speculation speculated by experts, successful investors, and other participants met in forums such like this and investors clubs where they interact with other like minded members.

But at the end the investor come up with a predicted value for future and compare that with current market price. Those who thinks current market price is undervalued compared to his/her prediction wants to buy the share and those who thinks current market price is overvalued compared to his/her prediction wants to sell the share. However the return he expects from such investment, normally should be higher than what it might yield from investing on other lower risked sectors such as Bank Deposits.

There are some simpler tools such as Earning per Share(EPS), Price Earning(PE) Ratio,Net worth per Share(NPS) , Growth Rate, Price Earning to Growth(PEG) ratio, Return on Invested Capital (ROIC) etc to assist predicting future yield.

Lot of people calculate EPS simply by "Net Income divided by number of shares" but overlooks the volatility. People investing for more than a quarter(3 months) must not overlook the volatility of EPS. Further EPS must be watched for its consistency over the period of (say 2,3 years for each quarter) for positive growths.

Most analyst use adjusted EPS by removing effect of non regular income and expenses of the company from net income. Long term investors not only focuses on EPS, PE Ratio but also in growth rate and dividend payout history of the company. For a company where there is no further growth, Simple EPS might be sufficient. If the EPS is more than your expected yield from the investment in other less riskier sector, then such stock might be a better purchase.

PE ratio is calculated as current price divided by EPS. But the problem is whis PE number must be taken as benchmark to compare stocks.
My personal views on this is it should depends on how much the investor can earn if same amount invested on other relatively safe sectors such as bank.
For example if average bank interest rate on deposit is say 5% then PE ratio of the stock must be preferably much lower than 20, say 15 as the investor is taking some risks. In developed countries where bank interest rate i of about 3-4 % PE ratio of up to 20 is considered favorable for the stocks of good companies.
As current Interest rate here is of about 8%, the PE ratio under 12 can be considered favorable for good companies with constant EPS.
Thus for companies with constant EPS, and with PE ratio lower than 12 (currently) are better purchase. But for companies with positive growth rates, PE ratio alone should not be used to evaluate the stock.


there might be other views on estimating benchmark PE Number. I appreciate other investors' views on this.


Growth rate can be estimated from their financial reports of several period. Here you have to watch for increase in their business volume and incomes and favorable conditions for their business growth. With these data you can predict an estimated growth rate.

Now you can use PEG ratio to compare the stock of different companies you want to invest on. The thumbs rule is that stock having value under 100% of PEG ratio is undervalued stocks and those over 100% are over valued stocks


Say Stocks A is Trading at PE of 18 with expected growth of 20%
and Stock B is trading at PE of 25 with expected growth of 30%

the PEG ratio for stock A is 18/20 or 90% and that of Stock B is 25/30 or 83%
Here Stock B is better purchase than stock A as it has lower PEG ratio

There are lot of other sophisticated tools evaluate the stock value... Above are just some simple tools which if you are aware of can judge the stock price most often. BEAWARE you should not use these tools alone to estimate the price of ill managed companies, companies not running in favorable external conditions.