Cyclically Adjusted Price Earnings (CAPE) multiple should be looked at more deeply by considering the context around it, points out Citi in its recent report. Tobias M Levkovich and the team at Citi Research note operating versus reporting earnings can generate very different CAPE outcomes. CAPE to be worn appropriately Citi analysts point out that in the face of high after-tax corporate margins aided by Fed-induced low financing rates, valuation has become the focus of discussion among investors. The analysts note that while various measures could argue for higher valuations including improvements in equity risk premiums or P/Es relative to…
Context Is Key: Don’t Look At CAPE In A Vacuum
Mani
Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports