[581043]

Hello I am looking at the latest annual report for a company called Mosaic and now I am having trouble finding the Price-Earnings (PE) ratio.

The equation to solve this ratio is (Market Price per share of Stock)/(Earnings Per Share)

First: Does this market price have to be historical market price? The earnings per share is from year end May 31 2007 so would I have to find the price of a share at that year end?

Second: My calculations are giving me some really weird answers.

Source: - Investor Relations - SEC Filings

It clearly states in this source "Basic net earnings (loss) per share"
2007: $.97
2006: ($.35)

So for 2007 I took the latest stock price and solved and then took historical price and solved.

2007: (103.37/970,000) = .000165 Times
2006: (25.23/-350,000) = -.000072 Times

This makes absolutely no sense. The MSN money page shows PE to be 40 for the industry. What am I doing wrong?

[morgaine300]

The industry PE is 40? Wow.

As for the market price, I could see the logic of using year-end price, and the logic of using an average for the year. Generally problems will tell you to use year-end, partly because it's the only easy number to get. A lot of times that's reported in the published financials. And it's pretty easy to get a PE ratio so I never figure these out myself. (This is really getting more into finance/investing, not accounting.)

You're not dividing by earnings per share. I don't know where you got 970,000 and 350,000 -- except that it's a million times bigger than it should be. That isn't the earnings. Did you multiply back out by number of shares or something? You're dividing by "earnings PER share." Which is the .97 and (.35) you quoted above. Except that's going to produce some really high PE ratios.

When I was looking at this yesterday, I noticed they didn't have any 5 year averages, making me wonder if this was a new company. And sometimes new companies can have some strange numbers.

Where did you get the stock prices? $103 is getting pretty high. But again, if it's a newer company, that could be driving the price up. (Although that seems pretty odd considering how 2007 did in the market overall.)