Statistical analysis of relationships between stock prices and earnings. - Page 52 |
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43 p r ic e . P o s s ib ly , a t t h i s p o in t i t would be p ro p er to ask i f what i s b e lie v e d tr u e o f an in d u s try group, based upon an a n a ly s is u sin g p e rc e n ta g e s of th a t in d u s tr y ’s t o t a l s , would a l s o be tr u e of an in d iv id u a l company in terras of i t s in d ep en d en t e a rn in g s and p r ic e e a rn in g s r a t i o . The com panies on which th e c o r r e l a t i o n a n a ly se s were made were s e le c te d f o r t h i s phase of th e stu d y fo r th e v ery re a so n t h a t an ex tre m e ly h ig h c o r r e l a t i o n between e a rn in g s and p r ic e was found to e x i s t . S in ce a h ig h c o r r e l a t i o n betw een two f a c to r s in d ic a te s a p a r a l l e l movement of th o se f a c t o r s , one would e x p e c t, w ith r e s p e c t to th e se com panies, t h a t th e change in th e e a rn in g s and in th e s to c k p r ic e would occur w ith some deg ree of u n ifo rm ity . T h e re fo re , should th e r e s u l t s of th e in d iv id u a l a n a ly se s a ls o in d ic a te a p a tte r n o f p r ic e la g , i t w ould, i t i s b e lie v e d , f u r th e r v a lid a te th e p re v io u s f in d in g s . Technique The an n u al re p o rte d e a rn in g s p er sh a re and th e p ric e e a rn in g s r a t i o s , computed on th e mean o f the an n u al p ric e ra n g e , o f th e s i x com panies c o n sid e re d in t h i s phase of th e stu d y i s shown in T able V III. As in a l l p re v io u s ta b le s and f i g u r e s , th e sto c k p r ic e i s ex p ressed in r e l a t i o n to th e e a rn in g s , e . g . , th e p ric e e a rn in g s r a t i o . However, th e d a ta in T able V III a re n o t p e rc e n ta g e s , b u t
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Title | Statistical analysis of relationships between stock prices and earnings. - Page 52 |
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Full text | 43 p r ic e . P o s s ib ly , a t t h i s p o in t i t would be p ro p er to ask i f what i s b e lie v e d tr u e o f an in d u s try group, based upon an a n a ly s is u sin g p e rc e n ta g e s of th a t in d u s tr y ’s t o t a l s , would a l s o be tr u e of an in d iv id u a l company in terras of i t s in d ep en d en t e a rn in g s and p r ic e e a rn in g s r a t i o . The com panies on which th e c o r r e l a t i o n a n a ly se s were made were s e le c te d f o r t h i s phase of th e stu d y fo r th e v ery re a so n t h a t an ex tre m e ly h ig h c o r r e l a t i o n between e a rn in g s and p r ic e was found to e x i s t . S in ce a h ig h c o r r e l a t i o n betw een two f a c to r s in d ic a te s a p a r a l l e l movement of th o se f a c t o r s , one would e x p e c t, w ith r e s p e c t to th e se com panies, t h a t th e change in th e e a rn in g s and in th e s to c k p r ic e would occur w ith some deg ree of u n ifo rm ity . T h e re fo re , should th e r e s u l t s of th e in d iv id u a l a n a ly se s a ls o in d ic a te a p a tte r n o f p r ic e la g , i t w ould, i t i s b e lie v e d , f u r th e r v a lid a te th e p re v io u s f in d in g s . Technique The an n u al re p o rte d e a rn in g s p er sh a re and th e p ric e e a rn in g s r a t i o s , computed on th e mean o f the an n u al p ric e ra n g e , o f th e s i x com panies c o n sid e re d in t h i s phase of th e stu d y i s shown in T able V III. As in a l l p re v io u s ta b le s and f i g u r e s , th e sto c k p r ic e i s ex p ressed in r e l a t i o n to th e e a rn in g s , e . g . , th e p ric e e a rn in g s r a t i o . However, th e d a ta in T able V III a re n o t p e rc e n ta g e s , b u t |