Question

Explain the chart below :

Date	Stock Price	PE Ratio
12/31/2017	1,169.5	$ 6.15	190.2
9/30/2017	961.4	$3.94	244.0
6/30/2017	968.0	$3.94	245.7
3/31/2017	886.5	$5.32	166.6
12/31/2016	749.9	$4.91	152.7
9/30/2016	837.3	$ 4.37	191.6
6/30/2016	715.6	$4.02	178.0
3/31/2016	593.6	$2.43	244.3

Answer 1

In this given chart, last coloumn is representing Earnings per share, as PE ratio = Market price per share / Earnings per share

Followings are the calculations of Earnings per share:

Date	Earnings per share (Price / PE ratio)
12/31/2017	= (1169.50 / 6.15) = 190.2
09/30/2017	= (961.40 / 3.94) = 244.0
06/30/2017	= (968.00 / 3.94) = 245.7
03/31/2017	= (886.50 / 5.32) = 166.6
12/31/2016	= (749.90 / 4.91) = 152.7
09/30/2016	= (837.30 / 4.37) = 191.6
06/30/2016	= (715.60 / 4.02) = 178.0
03/31/2016	= (593.60 / 2.43) = 244.3

Usually higher PE ratio is preferred as it indicates the positive future performance & investors are willing to pay more for the company's shares & vice versa for lower PE ratio.

In given chart PE ratio is in increasing trend ie earlier in 2016 PE ratio was 2.43 & then increased upto 6.15 in the year 2017. This indicates that company is in growth stage. It is having efficient & positive performance.