Normalised price to earnings (Norm. P/E)
Price divided by the average earnings per share of the last five years.
Averaging across a cycle is the standard defence against buying a cyclical business at the top of its earnings.
How it is computed here
Share price / mean earnings per share over the last five fiscal years
Combines more than one basis. See the note. Today's price over the mean earnings per share of the last five filed fiscal years. Filed under value. Neither a high nor a low reading is good on its own, so it is never coloured as one.
No published threshold exists for this figure, so this page prints none. Read it against the company's own history and its peers instead.
When it misleads
- Five years may not be a full cycle for heavy industry, shipping or commodities.
- For a company that has genuinely changed, the old years are noise rather than context.
- Earnings are converted to one currency before averaging; a company that changed reporting currency mid-period will read oddly.
- After a split, filed per-share figures are restated to today's share count, and the split is cited.
Questions
How is normalised price to earnings calculated?
Share price / mean earnings per share over the last five fiscal years. Combines more than one basis. See the note. Today's price over the mean earnings per share of the last five filed fiscal years.
What does normalised price to earnings tell a value investor?
Averaging across a cycle is the standard defence against buying a cyclical business at the top of its earnings.
When does normalised price to earnings mislead?
Five years may not be a full cycle for heavy industry, shipping or commodities. For a company that has genuinely changed, the old years are noise rather than context. Earnings are converted to one currency before averaging; a company that changed reporting currency mid-period will read oddly. After a split, filed per-share figures are restated to today's share count, and the split is cited.