Yahoo Answers is shutting down on May 4th, 2021 (Eastern Time) and beginning April 20th, 2021 (Eastern Time) the Yahoo Answers website will be in read-only mode. There will be no changes to other Yahoo properties or services, or your Yahoo account. You can find more information about the Yahoo Answers shutdown and how to download your data on this help page.
Trending News
Can someone explain what is meant by "valuations" in the sentence below?
"Stronger earnings also lower valuations, making silver miners look more attractive fundamentally to big institutional investors."
https://seekingalpha.com/article/4417265-silver-mi... makes no sense to me.
1 Answer
- Anonymous11 hours agoFavorite Answer
Valuation = relationship between company profit and stock price.
Stronger earnings (more profit per share) lowers the valuation (ratio between profit and share price) is the statement that was made (which is sometimes true but often false; here are some examples).
Let's say the company has profit per share of $1 and the shares are selling at $40. that's a valuation of 40 (40/1).
Let's say the company doubles it's earnings per share to $2 and the shares are now selling at $50. That's a valuation of 25 (50/2).
Stronger earnings don't necessarily mean lower valuations. Often they mean higher valuations.
Let's say the company again doubles it's earnings per share to $4 and now the shares are selling like hotcakes at $125. That's a valuation of 31.25 (125/4).
Silver is a crappy investment. LOL...