@maichblack price/book ratio is a much better valuation method than P/E ratio because it shows the intrinsic value of the share based on assets whereas the P/E only shows the valuation based on earnings which can change like the weather....

especially for a company like HFCK which was rocked by mismanagement and courruption using earnings to value the stock wouldnt be right since it is barely 2 years since completion of restructuring...

with housing demand in kenya growing at 50% per year and current earnings of HFCK being only 2% of the total asset base this company's growth potential is too large for one to ignore.....

another thing to look out for is when interest is finally sparked towards the counter its reltively low share float will send the price through the roof...

one tip for long term investors(5years or more): never use P/E as a valuation method for buying stocks before using all other valuation methods and research...

@ufanisi... a step better than p/e...considering earnings can be manipulated.. PSR...price to sales ratio...how much investors are currently paying for a shilling of annual revenues... if ratio is more than 1....definately pe will be too high..no matter the figure. as long as PSR is below 1... stock is a buy... case in point... Kakuzi... even as the market seems to behave like the stock has hit a ceiling.... the circus the share is playing between 69-77 is largely behavioral than fundamental...perception that "can it go higher really?" and the fact results announcing period imeisha.. but i digress.. back to housing finance.. too expe!

mmmmmhm.
well, no one uses just one ratio to analyse. but i prefer PSR to p/e. just me.

@guru.. am more keen on being a trader ..so short term does for me... window of analysis is 3 years past... growing revenues against competition means growing market...hence revenue ratios... earnings margin let me know how much of that revenue is turned into profit and whether the margin is growing over time... p/e just indicates what mood of investors is...and has distorted my investing in the past.. so i don't rely on it.. everyone who buys a share will tell you "low p/e" even without understanding what that means.

for 5 years down the line... well ..anything that grows annually by at least 15 % will double in size in 5 years...whether the growth is in earnings..or rather return on assets, return on equity or otherwise..


price to book value is relevant where comparing between companies within same industry..ama having similar capitalization criteria...e.g banks... keno/Total, Bamburi/Portland..ARM is loose ball..thanks to moving from solely cement..albeit marginally...