Lesson 11: Sector-Normal Multiples. P/E 32 is the median for software. The same number is screaming expensive in banking. Context first.
P/E 30 — expensive or not?
Same number, two very different industries.
Assessment
A software company and a bank both trade at a price-to-earnings ratio of 30. From that number alone, can you say which one is expensive?
Same 30. Same verdict? 🤔