Whilst I can accept some arguments regarding the use of PE...

Whilst I can accept some arguments regarding the use of PE valuations, I think that some people need to do some research regarding the correct valuation metrics to use for specific companies.

I am not going to get into what is more appropriate, but if you are going to use PE metrics choose your battles wisely, otherwise you will forgo some serious capital gains (or expose yourself to significant underperformance).

For example dick smith was promoted until recently because of its great PE and subsequent div yield.

Other stocks always criticised for high PEs include the infamous DMP, CSL, REA etc...

You need to dive deeper into a company's financials, growth prospects, historical performance, management, business cycle, key threats (macro and micro), etc.

THEGIMP

ps. I remember when Dmp reported a similar profit and had a market cap at slightly higher levels about 2 years ago, people were screaming about PE then.... Fast forward and you would have made 2.5 times your money. A great example of a company that executed its overseas expansion well and justified its PE.

guess what... It still trades on a Pe of 70