For example, a retailer has a business that goes forever. They buy in stock, sell it, generate cash. Unless their business model fails, it is PE forever and PE analysis is appropriate.
If Myer or Grace said "we are going to operate for 10 years and then close", what would the share price be then? Would you say "gee that's a great PE only to find in 10 years time the shares are worthless".
For junior oilers you need to look at cash in hand and value of reserves and how quickly it can be turned into cash at bank. Look at the way charl has done his analysis. That is much more appropriate. You simply cannot do PE on a finite resource like an individual oil field.
PE's on junior oilers - you may as well add the phone book.............
PPP Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
