price earnings ratios of ETFs

Stock prices aren't rational.

-- Ron

Be very wary of using the data at Yahoo Finance as they have numerous errors.

The IShares website shows the P/E for ITF to be 13.49 as of 12/31/2008.

I tend to be suspicious of forward estimates at the best of times. They mostly amount to extending the current trend line out into next year, biased by the analyst's optimism or pessimism. In times like these, they are pure fantasy.

Have you been reading earnings reports? Many companies have stopped offering guidance for next quarter, must less the year.

Of course, trailing P/Es can't tell you much right now, either. So what's a boy to do?

-- Doug

Use the P/B ratio. There are at least four problems with P/B.

The rating services use book value that includes goodwill and intangibles instead of tangible book value.

Book value doesn't change quickly so problems don't surface quickly compared to monitoring earnings or sales.

The rating services don't graph book value, making it difficult to see if management is diluting the value of the stock either through stock buy backs, stock options to employees, or acquiring other firms at a big premium to book value.

Growing firms can take advantage of accelerated depreciation artificially depressing book value.

-- Ron

Morningstar has them. It doesn't seem to allow the ETF screening tool to filter on that, but when you look at the page of information about any particular ETF, they have a "Price/Prospective Earnings" ratio.

Instead of looking up data for the ETF, look up data for the underlying index. Same goes for yields which are often missing or reported incorrectly on sources like Yahoo Finance. You need to adjust accordingly for ETF expenses, etc., but on something like a P/E on a major index that would be a minor factor.

-Tad

Forward estimates of earnings can be found within the price. If prices are low, it means investors expect earnings will be low in the future. The PE ratio is not a very useful accounting ratio unless you assume that earning is constant.