[INVX] P/E band (overlay)

11 Jun 2024

What is it?

• The P/E Bollinger Band indicator is a hybrid tool combining fundamental analysis (P/E ratio) with technical analysis (Bollinger Bands).
  
• It uses Bollinger Bands around a company's P/E ratio to identify potentially overvalued or undervalued zones.
  
• The P/E ratio itself measures a stock's price relative to its earnings per share.
  
• The Bollinger Bands, based on standard deviations, create a dynamic upper and lower band around the average P/E ratio.
  

Why P/E Bollinger Band?

• Provides a visual representation of a company's relative valuation compared to its historical P/E range.
  
• Can help identify areas where the P/E ratio might be deviating significantly from its historical norm.
  

Who should use it

• Investors who combine technical and fundamental analysis for a more comprehensive stock evaluation.
  
• Value investors seeking to identify potentially undervalued companies.
  

How to use

• A P/E value that breaches the upper Bollinger Band suggests potential overvaluation, indicating the stock might be due for a price correction.
  
• Conversely, a P/E value that falls below the lower Bollinger Band might signal undervaluation, presenting a potential buying opportunity (considering the company's fundamentals remain sound).
  

1 Jul 2024

Nota Keluaran

• Use earnings.standardized (fully diluted EPS) instead of earnings.actual.
  
• Hide P/E bands when P/E is negative.