P/E Ratio - Engineering Sector

[JillyB]

Does anyone have any idea where I can find the current average P/E ratio for the Engineering Sector of the FTSE.

Thanks

 

[Bill G]

Had a look at my data but when I saw such a range of difference in the P/E`s ,not a reliable guide to the state of engineering.You would have to be very selective e.g. what they manufacture to be blocked together.
Booth Industries Group P/E 1.7
Ross group P/E 275

 

[Tuffty]

CD REFS for May 05 had it at 11.7 fwd prosp PE (median), 10.7 (weitghted ave). Not very current I know, am waiting for the August CD.

 

[JillyB]

Thanks for that.

To give a few more details if anyone can help, the company is a Mech/Elec & Heat/vent contractor. We have been given two P/E ratios by different valuers - one is 3 and the other one is 9. As you will see this gives a totally different valuation for the company - that is why I'm trying to get an idea what the Sector average is - as both accountants say they have worked on 50% of the sector average - which doesn't make sense as they are both quoting differently.

I think the valuation at P/E of 3 would undervalue the company as it's bank balance + share portfolio value alone (not adding in fixed assest values, etc) exceeds the value the accountants put on the company.

Just trying to get a few thoughts together on it - if anyone can help.

 

[barjon]

jilly

Not quite sure what's going on here, nor the relevance of "50% sector average".

Are they trying to claculate a forward PE using average prospective earnings growth of the sector as a whole or what? As far as I know a PE ratio (if you're meaning Price/Earnings) does not "value" a company - it merely divides earnings per share into the current price.

I suppose you could say that a company with below average PE compared to the sector is "good value" but only if its earnings were expected to match the sector average. Certainly its earnings do not relate directly to its bank balance and assets etc so it's not relevant to use a PE ratio for that sort of valuation.

Or have I misunderstood?

jon

 

[JillyB]

jilly

Not quite sure what's going on here, nor the relevance of "50% sector average".

Are they trying to claculate a forward PE using average prospective earnings growth of the sector as a whole or what? As far as I know a PE ratio (if you're meaning Price/Earnings) does not "value" a company - it merely divides earnings per share into the current price.

I suppose you could say that a company with below average PE compared to the sector is "good value" but only if its earnings were expected to match the sector average. Certainly its earnings do not relate directly to its bank balance and assets etc so it's not relevant to use a PE ratio for that sort of valuation.

Or have I misunderstood?

jon

Hi Jon

The 50% sector average is the equation applied to value a company in the private sector - where it isn't quoted on the stock market. This is why I am trying to find out what the sector average is, as two different accountants are using two different values. Yahoo gives details for individual companies, but I'm trying to find a list of companies that are in the engineering sector so I can work out an average P/E for them.

Do you know of any sites that list the all companies included in the various sectors?

 

[barjon]

jilly

mmm, seems a very odd way to value a company to me, unless I'm missing something.

Don't know of a site off-hand - I guess the easiest way is to buy a Financial Times. That'll have all the shares listed in the sector and the actuarial page with have all the sector averages.

jon

 

[JillyB]

Thanks Jon

I think I'm going to have to do that - just thought that the information would be available somewhere on the web.

 

[Tuffty]

PE's can be forward looking on prospective numbers, or historic on actual numbers thus the possible cause of differing quoted PE's. REFS gives you every quoted co's PE ratio and the sector ave (as above) but is is a subscription service.

 

[Tuffty]

"Mech/Elec & Heat/vent contractor"
Just a thought.....
Is Engineering the correct sector? If they service then maybe they could be classified under "Support Services", or under 'Construction' if they mainly install into new builds.

 

[JillyB]

"Mech/Elec & Heat/vent contractor"
Just a thought.....
Is Engineering the correct sector? If they make are a service company then maybe they could be classified under "Support Services", or under 'Construction' if they mainly install into new builds.

Good point Tuffty,

I think I will look into this more. Thanks for your help.

 

[Tuffty]

JillyB, I don't know the relevence of the valuation (whether it's beneficial higher or lower) but I would take a large pinch of salt with any accountants valuation (unless they're doing it to a strict methodology for tax purposes etc).

 

[the blades]

Good point Tuffty,

I think I will look into this more. Thanks for your help.

Eyup Jilly,

I've attached some data from sharescope for the sector/ Hope this helps.

UTB

 

[JillyB]

Eyup Jilly,

I've attached some data from sharescope for the sector/ Hope this helps.

UTB

Thanks Blades, you're a treasure - that's just what I wanted.

(And from Yorkshire too! Ex Yorkshire lass here!)

 

[the blades]

(And from Yorkshire too!

Aye, the bill's in the post.



Seriously, no bother.

UTB

 

[deepete]

I think the FT gives sector averages on page 40.. or something like that.

I was trying to find the same info for US sectors without much luck, i wanted to filter the shares to below a certain p/e value but some of the replies suggest that they cant be trusted anyway.

 

[marben]

Hi Jill,

FWIW Hemscott gives the forward P/E for the engineering & machinery sector as 12.79.

Jon, I think I understand what the accountants are driving at: earnings x P/E * 50% = value for private company.

HTH,

Mark

 

[JillyB]

Hi Jill,

FWIW Hemscott gives the forward P/E for the engineering & machinery sector as 12.79.

Jon, I think I understand what the accountants are driving at: earnings x P/E * 50% = value for private company.

HTH,

Mark

Thanks for that - this makes things a bit easier - a least I have a source of information to refer to .