Valuation Multiples are calculated for portfolios by taking the asset-weighted average of the price/earnings, price/book, price/sales, and price/cash flow ratios of the holdings in the portfolio.
The most-recent valuation multiples for the benchmark are also provided.
Price/Earnings Ratio
The price/earnings (P/E) ratio of a fund is the weighted average of the price/earnings ratios of the stocks in a fund's portfolio. The P/E ratio of a company, which is a comparison of the cost of the company's stock and its trailing 12-month earnings per share, is calculated by dividing these two figures.
Price/Book Ratio
Book value is the total assets of a company, less total liabilities (sometimes referred to as carrying value). The price/book (P/B) ratio of a fund is the weighted average of the price/book ratios of all the stocks in a fund's portfolio. A company's price to book value is calculated by dividing the market price by the company's book value per share. (Stocks with negative book values are excluded from this calculation.)
Price/Sales Ratio
Price/sales represents the amount an investor is willing to pay for a dollar generated from a particular company's operations. The price/sales ratio of a fund is the weighted average of the price/sales ratios of all the stocks in a fund's portfolio. A company's price/sales ratio is calculated by dividing the market price of its outstanding stock by the company's sales per share.
Price/Cash Flow
Price/cash-flow represents the amount an investor is willing to pay for a dollar generated from a particular company's operations. Price/cash-flow shows the ability of a business to generate cash and acts as a gauge of liquidity and solvency. Because accounting conventions differ among nations, reported earnings (and P/E ratios) may not be comparable across national boundaries. Price/cash-flow attempts to provide an internationally-standard measure of a firm's stock price relative to its financial performance.
The price/cash flow ratio of a fund is the weighted average of the price/cash flow ratios of all the stocks in a fund's portfolio. A company's price/sales is calculated by dividing the market price of its outstanding stock by the company's cash flow per share over the trailing 12 months.