Published on 12 Mar 2020 on Simply Wall St. via Yahoo Finance

A Rising Share Price Has Us Looking Closely At Compagnie de Saint-Gobain S.A.'s (EPA:SGO) P/E Ratio

Those holding Compagnie de Saint-Gobain (EPA:SGO) shares must be pleased that the share price has rebounded 33% in the last thirty days. But unfortunately, the stock is still down by 29% over a quarter. But shareholders may not all be feeling jubilant, since the share price is still down 33% in the last year.

All else being equal, a sharp share price increase should make a stock less attractive to potential investors. In the long term, share prices tend to follow earnings per share, but in the short term prices bounce around in response to short term factors (which are not always obvious). The implication here is that deep value investors might steer clear when expectations of a company are too high. One way to gauge market expectations of a stock is to look at its Price to Earnings Ratio (PE Ratio). A high P/E implies that investors have high expectations of what a company can achieve compared to a company with a low P/E ratio.