Could I value a company based on P/E of 272, of a similar company in LSE?

[mikewelsh]

A public company in LSE has a P/E ratio of 272. So, should i be valuing a company based on profit x 272? Since this startup is doing the same thing as the listed company, but in different region

 

[Rhodes100]

If you are buying my business definitely you should pay 272 times my annual profits!

Tell me why would a business start up be worth pound for pound the same amount of money as a listed company?

 

[Walkol]

A public company in LSE has a P/E ratio of 272. So, should i be valuing a company based on profit x 272? Since this startup is doing the same thing as the listed company, but in different region

No. Without sounding abrupt, nothing else needs said.

 

[10032012]

A public company in LSE has a P/E ratio of 272. So, should i be valuing a company based on profit x 272? Since this startup is doing the same thing as the listed company, but in different region

you are using the figures of a listed company's P/E ratio, to price a non-listed company that is a start-up?

A P/E ratio isn't generally a good way of valuing a business anyway.

 

[Moneyman]

If you have one bad year but the company still has loads of assets. The E goes down and the P says the same. Therefor The pe will go shooting up.

 

[spreadtrader]

A public company in LSE has a P/E ratio of 272. So, should i be valuing a company based on profit x 272? Since this startup is doing the same thing as the listed company, but in different region

No. You'd then be valuing your new business that doesn't make a profit on the earnings of one that does.

The listed company may have a patent or I.P. or an exclusive deal that the market has priced into its valuation of the PLCs shares.

A copycat company would have to develop their own edge and let the market price it accordingly.

Companies that have explosive growth potential tend to have high PE ratios. All it means is an investor is paying a premium for expected future cash flows.

If my theoretical small Pharma PLC found a cure for cancer the PE would sky rocket as investors pile in and push up the share price. Whereas another bio med company starting up to look for a cure for cancer couldn't possibly value their business based on our PE.

Though they could make more accurate future financial projections of the businesses potential future value based on my companies PE and price action if they were to find another cure for cancer.