Question

I ve seen a lot of discrepancies in PE or PB ratios in different websites or data providers. Later I found that the difference was due to the use of standalone numbers by some websites while others used consolidated figures. Which is the right or standard methods (whether standalone or consolidated). Please clarify.

Answer 1

It depends on what you need them for. For valuation you might use industry medians for either PE or PB.

Answer 2

Hi Mikeiam,
My questions is whether to use Standalone or Consolidated numbers for calculation of PE or PB. For instance when you look at EPS - do you take the cons. EPS or the standalone EPS? Which is more acceptable as per industry standard?

Answer 3

Hi sridharcw,
What are "consolidated" numbers exactly? Did you mean a "normalised" numbers? Since you are interested in a long term earning power, an average EPS is more appropriate than current EPS. Theoretically, you can use EPS forecasts as well. I'm not quite certain about what you mean under the terms "standalone" and "consolidated".

Answer 4

Consolidated refer to the financial of teh company as well as its income from subsidiaries, associate companies, etc. Standalone is teh company's own financials. Hope this clarifies.

Answer 5

There is no point in using standalone financials unless you are going to sell this particular associate firm. In your example, since you are looking for a value of a public company, you should use consolidated data. Besides, the price you are referring to in your calculations belongs to a parent company, not a subsidiary. Hopefully, it will help.