remain intact. P.E at 20-30+ – In this range, the stock is “overvalued”. If at the same time, P.E ratio is greater than twice of the last three year’s average profit growth rate then avoid the stock. P.E at 5-8 or below 5 – In this case, it requires serious attention. We can’t mark it as “undervalued” without having an in-depth study. Such low valuation may be because of recent serious damage in the fundamental of the company.
