<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Do you want to participate in a short research study? Help us shape the future of investment tools and get a chance to win a $ 250 gift card!"data-reactid =" 27 ">Do you want to participate in a short research study? Help us shape the future of investment tools and get a chance to win a $ 250 gift card!

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "This article is written for those who want to get better use of Price / Earnings Ratios (P / E Ratios) To keep this practical, we will show you how the P / E ratio of Bank of South Carolina Corporation (NASDAQ: BKSC) can help you evaluate the value proposed. Bank of South Carolina has a P / E ratio of 16.7, based on the last twelve months. In other words, at current prices, investors are paying $ 16.7 for every dollar of earnings last year. "Data-reactid =" 28 "> This article is for those who wish to improve the price / earnings ratio (P / E) .To keep it practical, we will show how the P / E ratio of the Bank of South Carolina Corporation (NASDAQ: BKSC) could help you evaluate the proposed value. Bank of South Carolina has a P / E ratio of 16.7, based on the last twelve months. In other words, at today's prices, investors pay $ 16.7 for every dollar spent the year before.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " See our latest analysis for Bank of South Carolina "data-reactid =" 29 "> Check out our latest analysis for Bank of South Carolina

How to calculate a price / earnings ratio?

<p class = "canvas-atom text-canvas Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The formula for P / E is: "data-reactid =" 31 "> The formula for P / E is:

Price / earnings ratio = Share price ÷ Earnings per share (EPS)

Or for Bank of South Carolina:

P / E of 16.7 = 18.12 USD 1.08 (Based on the previous twelve months to September 2018.)

Is a high P / E ratio good?

<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "A higher P / E ratio implies that investors pay a higher price for the power to win the business. This is not necessarily good or bad, but a high P / E implies relatively high expectations as to the results that a company can achieve in the future. "Data-reactid =" 36 "> A higher P / E ratio implies that investors pay a higher price for the power to win the business. This is not necessarily good or bad, but a high P / E implies relatively high expectations of what the company can achieve in the future.

How growth rates affect P / E ratios

Earnings growth is probably the most important factor in determining a company's P / E ratio. Profit growth means that in the future the "E" will be higher. This means that even if the current P / E is high, it will decrease over time if the stock price remains stable. Then, a decline in the P / E ratio should attract more buyers, raising the share price.

It's great to see that the Bank of South Carolina realized a 10% EPS last year. And its annual growth rate of EPS over 5 years is 6.6%. This could arguably justify a relatively high P / E ratio.

What is the P / E ratio of Bank of South Carolina compared to peers?

The P / E ratio essentially measures a company's market expectations. As you can see below, Bank of South Carolina has a higher P / E than the average banking sector (13.3%).

NASDAQCM: BKSC PE PEG Indicator, February 11, 19

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<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Its relatively high P / E ratio indicates that the bank South Carolina shareholders believe that its performance will be better than other companies in its rankings. Shareholders are clearly optimistic, but the future is still uncertain so investors need to go further. if the insiders of the company bought or sold. "data-reactid =" 54 "> Its relatively high P / E ratio indicates that Bank of South Carolina shareholders believe that its performance will be superior to that of other companies in its sector ranking. but the future is still uncertain.Indoor investors should go further.I like to check if the insiders of the company bought or sold.

Do not forget: the P / E ratios do not take into account the balance sheet

Remember that the P / E ratio takes into account market capitalization. This means that it does not take into account debt or cash. Theoretically, a company can improve its profits (and produce a lower P / E in the future) by borrowing (or spending the remaining cash).

Overall, these expenses can be good or bad, but the bottom line here is that you need to look at the debt to understand the P / E ratio in its context.

Bank of South Carolina balance sheet

Since the Bank of South Carolina has a net cash position of $ 30 million, it can invest in growth, which justifies a higher P / E ratio than otherwise.

Bank of South Carolina's C / B Ratio

Bank of South Carolina has a P / E of 16.7. That's about the average of the US market, which is 16.8. With a strong balance sheet combined with recent growth, the P / E ratio suggests that the market is rather pessimistic.

Investors should look to buy stocks for which the market is not good. If the reality of a company is not as bad as the P / E ratio indicates, the stock price should rise as the market realizes it. We do not have analyst forecasts, but you can better understand its growth by looking at this more detailed historical graph of earnings, revenues, and cash flow.

The story continues

<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "But note: Bank of South Carolina may not be the best stock to buy. So take a look at this free list of interesting companies with strong earnings growth recently (and a P / E ratio below 20). "data-reactid =" 67 "> But note: Bank of South Carolina may not be the best stock to buy. So take a look at this free list of interesting companies with strong earnings growth recently (and a P / E ratio below 20).

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "To help readers understand the past volatility of the financial market in the short term, our goal is to provide you with a long-term research analysis based solely on fundamental data. Note that our analysis does not take into account the latest price sensitive business announcements.

The author is an independent contributor and, at the time of publication, was not positioned in the actions mentioned. For errors that need to be corrected, please contact the publisher at editorial-team@simplywallst.com.

"data-reactid =" 68 "> To help readers overcome the short-term volatility of the financial market, we aim to provide a long-term research analysis based solely on fundamental data. ignores the latest price sensitive business announcements.

The author is an independent contributor and, at the time of publication, was not positioned in the actions mentioned. For errors that need to be corrected, please contact the publisher at editorial-team@simplywallst.com.