Junior Market closing in on Main Market PE

The Junior Market started the year with an average PE ratio of 10 times earnings for 2021 and it gradually moved up throughout last year as the market grew by 33 percent from the start of 2021 to mid-January pushing the ratio to 15.8 times 2021 earnings at the close of trading on Wednesday.
The growth in the PE ratio is remarkable and is helped by nearly 30 percent of Junior Market stocks trading at a PE around 19 times earnings and over. The Junior Market PE is back at 10 times 2022 projected earnings, an indication that investors can look forward to another year of robust growth. Some companies’ PEs are low due to a fall out in revenues and profits for a number of them as investors await new information before revaluing them.
The Junior Market that was playing second fiddle to the Main Market is rapidly closing the gap with a difference now just a few points adrift of the average PE Ratio of 16.2 times 2021 earnings for the Main Market at the close of trading on Wednesday, a level that is has been at from late last year. The Main Market PE fluctuated mostly between 15 and 17 times for most of last year.
At the end of April last year, the average PE for the Junior Market was 13 and 16.5 for the Main Market. At the end of June it was 13 and 17 respectively and September 12 and 15.5 times.
The PE Ratio is one of the most popular formulae used by investors in computing appropriate stock values. In investing in stocks the PE ratio helps in assessing if a stock is overpriced or not. If it is not and is priced lower than others in the market especially those priced lower than the average of the market then an investment in the stock could be a good one.
ICInsider.com daily stock market reports for Jamaica carry the PE for each ordinary share with the projected earnings for each company so investors can make their assessment using those reports.