bounce: comments please, page-17

Yea just subtracted the dividend. If you study managerial economics the VALUE of the company changes after a stock pays a dividend - thus why the stock falls by the same amount after it goes ex-dividend.

A dividend is money the company can not longer use and invest with, If you take the PE's of the stocks with earnings adjusted for dividends you put it all back to a level playing field for comparison.

The market will put BHP on a higher normal PE as it retains earnings and makes money on that, ZFX does not. Find any stock with a high dividend they should all have low PE's because of that, adjust it and they should be equal.

But as you see put BHP and ZFX on a level playing field and they are about equal.