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Why Galaxy Entertainment Group Limited’s (HKG:27) High P/E Ratio Isn’t Necessarily A Bad Thing

Today, we’ll introduce the concept of the P/E ratio for those who are learning about investing. To keep it practical, we’ll show how Galaxy Entertainment Group Limited’s (HKG:27) P/E ratio could help you assess the value on offer. Galaxy Entertainment Group has a price to earnings ratio of 17.75, based on the last twelve months. In other words, at today’s prices, investors are paying HK$17.75 for every HK$1 in prior year profit.

See our latest analysis for Galaxy Entertainment Group

How Do You Calculate Galaxy Entertainment Group’s P/E Ratio?

The formula for price to earnings is:

Price to Earnings Ratio = Price per Share ÷ Earnings per Share (EPS)

Or for Galaxy Entertainment Group:

P/E of 17.75 = HK$53.25 ÷ HK$3 (Based on the year to June 2019.)

Is A High Price-to-Earnings Ratio Good?

A higher P/E ratio means that buyers have to pay a higher price for each HK$1 the company has earned over the last year. All else being equal, it’s better to pay a low price — but as Warren Buffett said, ‘It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.’

How Does Galaxy Entertainment Group’s P/E Ratio Compare To Its Peers?

The P/E ratio indicates whether the market has higher or lower expectations of a company. As you can see below, Galaxy Entertainment

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