When considering equity valuations, there are many different measures that investors can turn to. Each tells a different story. They all have their benefits and shortcomings, so a rounded approach that takes into account their often-conflicting messages is the most likely to bear fruit.
A common valuation measure is the forward price-to-earnings multiple or forward P/E. We divide a stock market's value or price by the aggregate earnings per share of all the companies over the next 12 months. A low number represents better value.
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