How to interpret P/E ratio of Philippine company stocks

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In stock investing and in value investing in the Philippines, we know that the market goes up and down. When it is up, the prices of stocks rise and it’s pretty tricky to find ones that are inexpensive. When it is down, the prices of stocks goes down too and it’s pretty tricky again to find the cheapest of the bunch.

So how do you find the a stock that’s reasonably priced? One indicator can tell you that. It’s called P/E ratio.

In this article, I’m going to discuss about what it is, how it’s used, its limitations, and the ranking of blue chip stocks from lowest to highest P/E ratio.

What is price-to-earnings ratio?

Price-to-earnings ratio, P/E ratio or PER refers to the relationship of the market price of a company stock to its annual earnings. In formula, it is expressed as price per share divided by earnings per share.

Market price

The market price is whatever is the price that the stock is trading in the market, while earnings per share can be the previous year or the past four quarters.

You can find the price of any Philippine company shares on the Philippine Stock Exchange (PSE), stock brokers, and finance websites such as Wall Street Journal and Bloomberg.

Earnings per share (EPS)

Earnings per share is obtained by dividing the total earnings of the company with the total number of outstanding shares. Its formula is:

Likewise, you can find the earnings per share from the annual and quarterly reports that companies submit to the Securities and Exchange Commission and published through the PSE website. Specifically, it is published on the income statement of the company. You may also find annual reports available on the website of the company.

Why use P/E?

Just like price-to-book-value-per-share, when you start looking for cheap stocks, you might be tempted to look and judge them at their market price.

Say that there are two companies that you’re considering and the only information you have are their stock prices. On the table, you might think that Company Y is more expensive. It is five times than the price of Company X.

Company X₱100
Company Y₱500

But companies are not created equally. Some companies are growing more than others, they are better managed, or they have better future prospects of continued growth.

The P/E ratio gives more information than the market price. It tries to tie up what people are willing to pay to buy the shares (price) with the business.

Its primary goal is for you to know how far or how close its market price to the earnings reported by the company. What it does is to give an understanding if the prevailing price makes sense in the context of the business and its ability to earn out from its operations.

To better understand this, let’s use an analogy.

Suppose that you’re about to buy two sari-sari stores. Store A is on sale for ₱1,000, and Store B is on sale for ₱5,000. With that information alone, you would go for Store A because it’s cheaper.

Now, let’s consider their earnings. Imagine that Store A reports earnings of ₱100 and Store B, ₱1,000. Comparing their P/E ratio, we have:

PriceEarningsP/E Ratio
Store A₱1,000.00₱10010.00
Store B₱5,000.00 ₱1,0005.00

As you can see Store B has a lower P/E ratio compared to Store A. We can interpret this data by saying that in Store B, we only have to spend ₱5 to get a business that earns ₱1. And that Store A actually is twice as expensive because we have to spend ₱10 to get the same ₱1 earning.

This means that the lower P/E ratio, the closer the price is to the earnings and therefore it’s “cheaper”. The higher the P/E ratio, the farther the price is from the earnings and therefore it’s “more expensive”.

Price per share

I promise I’ll continue to discuss about P/E ratio, but let’s talk a bit about price per share.

Price per share is the price that investors are willing to pay to acquire a stock. It is subject to demand. The more there is demand for a stock, the higher its price goes. The opposite happens when there is less demand and people want to sell their shares, and the price plunges accordingly.

It’s also a subjective appreciation of the business. Some investors buy stocks that they are familiar with such as companies with established brand recall or robust marketing and advertising efforts. Like, someone buys a fastfood company stock because they eat there frequently, or subscribe to a power, water and telecom companies because these are things that they use daily.

Position traders also jack up prices. They are people who buy a stock when they think that it’s going to go up in a short term. Maybe they saw according to their analysis that a stock is poised to break out from some level and will continue to climb up higher in the next coming days or weeks, and they could gain a quick buck by the spread between purchase price and selling price.

Sometimes, company news can make or break the price per share such as when a corporation is reported to sign a lucrative corporate deal, acquisition or merger. When the government announced an invitation for a third telco a few years back, some technology stocks rose. Or when the Build, Build, Build program of the government was announced, stocks that are in construction, cement production and banking increased.

What this all means is that the market price can be so divorced from the fundamentals of the business. That they can be so high that investors lose the sense to look at whether it is realistically supported.

This is where P/E ratio can be of help. It can provide the cold bucket of reality when the market price has become so extraordinarily high.

How to interpret P/E ratio

If a company has a high P/E ratio, is it overvalued? If it’s just the price in relation to earnings and nothing else, then yes. It makes sense to go for lower P/E if that’s only indicator that is being considered. However, it can also be relative. For instance, is it higher than the average in the industry that the company is under? There might be a reason why the stock is valued highly. It might be regarded as growth company for instance.

If a company has a low P/E ratio, is it undervalued? Again, if it’s just the price and earnings, then yes. A low P/E might suggest that the company is undervalued.

Take note that there might be a reason why the stock is valued so low. It may not be liquid, so buying and selling may not be as easy as you want it to be. It may also have very low prospects for the future, the investing public does not trust the management, or it has history of dubious financial decisions.

What is considered high or low P/E ratio? There is no consensus on what is considered high or low P/E ratio. Usually, comparisons are done between companies engaged in similar businesses.

The P/E ratio of blue chip stocks

See below table of P/E ratio of companies arranged from the highest to lowest. Data is updated as of December 29, 2020, which is the last trading day in the stock market.

Name2020 PricePE
Island Information and Technology, Inc.0.129,967.91
Synergy Grid and Dev’t Phils., Inc.242.006,050.00
Asiabest Group International, Inc.10.382,076.00
Transpacific Broadband Group Int’l. Inc.0.341,675.00
Atok-Big Wedge Company, Inc.7.991,268.25
ATN Holdings, Inc. ”A”0.851,231.88
MJC Investments Corporation1.90950.00
Filipino Fund, Inc.7.00909.09
AgriNurture, Inc.8.00800.00
ATN Holdings, Inc. ”B”0.88800.00
Unioil Resources and Holdings Co., Inc.0.25585.71
Manila Mining Corporation ”B”0.01550.00
Berjaya Philippines, Inc.6.00500.00
Manila Mining Corporation ”A”0.01500.00
Keppel Philippines Properties, Inc.3.38338.00
First Abacus Financial Holdings Corp.0.72240.00
Basic Energy Corporation0.47235.00
I-Remit, Inc.1.68184.62
LMG Corp.4.45164.82
Philippine Trust Company120.00153.85
Oriental Peninsula Resources Group, Inc.0.81135.00
Crown Equities, Inc.0.15128.07
Primex Corporation1.50125.00
Int’l Container Terminal Services, Inc.123.50119.22
Marcventures Holdings, Inc.1.46112.31
Atlas Cons. Mining and Dev’t Corp.6.46107.67
NiHAO Minerals Resources Int’l, Inc.3.02100.67
Manila Jockey Club, Inc.2.3194.67
SOCResources, Inc.0.7687.36
Paxys, Inc.2.3578.33
Araneta Properties, Inc.1.1973.91
Mabuhay Holdings Corporation0.5472.00
Liberty Flour Mills, Inc.38.6067.72
Boulevard Holdings, Inc.0.0465.00
Philippine Seven Corporation119.8062.72
Premiere Horizon Alliance Corporation1.1061.11
Manila Bulletin Publishing Corp.0.4560.96
Alsons Consolidated Resources, Inc.1.3659.13
DFNN, Inc.5.1553.09
Central Azucarera De Tarlac14.6445.75
GEOGRACE Resources Philippines, Inc.0.2944.53
Leisure and Resorts World Corporation1.9240.38
Philex Mining Corporation4.9540.24
PXP Energy Corporation11.0039.29
F and J Prince Holdings Corp. ”A”2.9937.38
Suntrust Home Developers, Inc.1.6736.30
COL Financial Group, Inc.34.0035.42
Phil. Estates Corporation0.4335.42
Far Eastern University, Inc.630.0035.04
Apex Mining Company, Inc.1.7334.60
Universal Robina Corporation152.5034.42
iPeople, Inc.9.0033.43
Jollibee Foods Corporation195.2033.16
PTFC Redevelopment Corporation42.1529.89
SM Prime Holdings, Inc.38.5029.17
Megawide Construction Corporation7.9428.36
SM Investments Corporation1,049.0028.35
Nickel Asia Corporation5.6028.00
Euro-Med Laboratories Phil., Inc.2.3426.00
Republic Glass Holdings Corp.3.0525.42
Century Peak Holdings Corporation2.9424.50
Bogo Medellin Milling Company79.0023.30
Vitarich Corporation0.9122.75
Roxas Holdings, Inc.1.8122.63
San Miguel Corporation128.1021.60
Keppel Philippines Holdings, Inc. ”B”5.0621.08
BDO Leasing and Finance, Inc.3.1621.07
Oriental Pet. and Minerals Corp. ”A”0.0120.92
D and L Industries, Inc.7.7020.81
Phoenix Petroleum Philippines, Inc.12.5020.49
APC Group, Inc.0.4120.25
MRC Allied, Inc.0.5919.67
Easycall Comm. Phils., Inc.6.8618.54
The Philippine Stock Exchange, Inc153.9018.48
The Philodrill Corporation0.0118.33
Ayala Land, Inc.40.9018.18
Puregold Price Club, Inc.41.0017.30
Oriental Pet. and Minerals Corp. ”B”0.0117.14
JG Summit Holdings, Inc.71.6016.38
Keppel Philippines Holdings, Inc. ”A”5.1916.32
Benguet Corporation ”A”3.1016.32
Jolliville Holdings Corporation5.2015.79
Ayala Corporation827.0015.28
Petron Corporation3.9914.25
Manila Electric Company292.0014.13
Dizon Copper Silver Mines, Inc.8.2213.93
Vistamalls, Inc.4.2413.59
Cebu Property Venture and Dev’t Corp.”B”7.0013.21
Holcim Philippines, Inc.7.2512.95
PLDT, Inc.1,340.0012.89
Bank of the Philippine Islands81.3512.73
Robinson Land Corporation21.2012.70
Alliance Select Foods Int’l, Inc.0.6612.67
RFM Corporation4.5512.64
Globe Telecom, Inc.2,030.0012.46
Aboitiz Equity Ventures, Inc.47.2512.08
Phinma Corporation10.0012.05
Philippine Racing Club, Inc.7.4011.96
Roxas and Company, Inc.1.2911.73
Cirtek Holdings Philippines Corporation6.6411.65
Sun Life Financial, Inc.2,000.0011.59
Victorias Milling Company, Inc.2.5011.36
Aboitiz Power Corporation26.5511.30
GMA Network, Inc.6.0011.13
BDO Unibank, Inc.106.8010.66
Anchor Land Holdings, Inc.8.1510.58
Vulcan Industrial and Mining Corporation1.0510.57
Security Bank Corporation134.0010.00
Centro Escolar University6.909.72
Macroasia Corporation6.809.58
Sta. Lucia Land, Inc.1.989.43
Seafront Resources Corporation1.859.30
Solid Group, Inc.1.119.25
National Reinsurance Corp. of the Phils.0.679.05
Bloomberry Resorts Corporation8.118.98
Philippine Bank of Communications21.058.73
Ginebra San Miguel Inc.49.408.71
Anglo-Philippine Holdings Corporation0.778.56
Asian Terminals, Inc.15.588.38
Integrated Micro-Electronics, Inc.9.108.32
SPC Power Corporation9.828.25
Mabuhay Vinyl Corporation4.538.24
Metropolitan Bank and Trust Company49.057.86
Philippine Business Bank12.807.81
Acesite (Phils.) Hotel Corp.1.487.79
STI Education Systems Holdings, Inc.0.477.75
Cebu Holdings, Inc.5.907.66
Manulife Financial Corporation820.007.58
Megaworld Corporation4.087.56
Empire East Land Holdings, Inc.0.327.50
Petroenergy Resources Corporation3.747.26
Manila Water Company, Inc.15.987.23
DMCI Holdings, Inc.5.667.17
First Gen Corporation28.156.97
Filinvest Development Corporation9.446.84
EEI Corporation7.596.80
Philippine Savings Bank54.606.80
Rizal Commercial Banking Corp.18.886.79
Global-Estate Resorts, Inc.0.926.77
China Banking Corporation24.956.65
Vantage Equities, Inc.1.046.47
GT Capital Holdings, Inc.585.006.39
Union Bank of the Philippines71.906.24
Belle Corporation1.716.22
Vivant Corporation14.126.18
LT Group, Inc.13.106.12
City and Land Developers, Inc.0.736.08
Semirara Mining and Power Corporation13.786.04
Alliance Global Group, Inc.10.605.80
Metro Pacific Investments Corporation4.285.66
Cityland Development Corporation0.815.40
Vista Land and Lifescapes, Inc.4.685.26
Ionics, Inc.1.205.04
Shang Properties, Inc.2.714.75
Imperial Resources, Inc.1.674.64
ABS-CBN Corporation11.684.56
A Brown Company, Inc.0.904.50
A. Soriano Corporation6.604.31
Filinvest Land, Inc.1.124.31
Panasonic Manufacturing Phils. Corp.5.394.28
Philippine National Bank29.354.16
Century Properties Group, Inc.0.454.09
East West Banking Corporation10.803.90
Philweb Corporation2.893.89
Lorenzo Shipping Corporation1.013.89
Waterfront Philippines, Inc.0.583.60
Arthaland Corporation0.653.42
Cebu Air, Inc.50.503.32
Philippine Realty and Holdings Corp.0.333.30
House of Investments, Inc.4.023.28
First Phil. Holdings Corp.77.003.20
Rockwell Land Corporation1.543.19
Benguet Corporation ”B”3.002.97
Pacific Online Systems Corporation2.112.95
Lopez Holdings Corporation3.722.91
AbaCore Capital Holdings, Inc.0.642.88
Swift Foods, Inc.0.132.55
IP E-Game Ventures Inc.0.012.35
Ever Gotesco Resources and Hold’gs, Inc.0.092.02
Lepanto Consolidated Mining Co. ”A”0.162.01
Lepanto Consolidated Mining Co. ”B”0.161.96
Greenergy Holdings, Inc.2.601.47
Philippine Infradev Holdings Inc.1.411.33
TKC Metals Corporation0.97(1.94)
Cyber Bay Corporation0.33(7.02)
Forum Pacific, Inc.0.23(7.26)
Omico Corporation0.38(15.78)
Wellex Industries, Inc.0.22(24.89)
United Paragon Mining Corporation0.01(29.00)
Asia Amalgamated Holdings Corp.1.61(35.70)
Abra Mining and Industrial Corp.0.00(60.42)
Lodestar Investment Hldgs Corp.0.83(138.33)
Zeus Holdings, Inc.0.18(766.67)
Pacifica Holdings, Inc.3.19(35,444.44)
2GO Group, Inc.8.3
8990 Holdings – Series A Perpetual Pref102
ABS-CBN Holdings Corporation ”PDR”12.60
AC Energy Philippines, Inc.9.00
ACE Enexor, Inc.11.50
Ayala Corporation Preferred Class ”A”500.00
Ayala Corp. Class ”B” Series 1 Pref.520.00
Arthaland Corp. Perpetual Pref ”B”101.10
Arthaland Corp. Perpetual Pref ”C”110.00
AyalaLand Logistics Holdings Corp.3.40
Ayala Corp. Class ”B” Pref. Shares515.50
Apollo Global Capital, Inc.0.13
Altus Property Ventures, Inc.12.40
AREIT, Inc.29.35
Asia United Bank Corporation44.90
Axelum Resources Corp.3.50
Benguet Corporation Conv. Pref. ”A”12.00
BHI Holdings, Inc.901.00
Bright Kindle Res. and Investments, Inc.0.91
Chelsea Logistics and Infra Hdgs Corp.5.21
Concrete Aggregates Corp. ”A”53.55
Concrete Aggregates Corp. ”B”60.10
Cemex Holdings Philippines, Inc.1.45
Concepcion Industrial Corporation23.40
Chemical Industries of the Phils.126.80
Cebu Landmasters, Inc.5.05
Century Pacific Food, Inc.17.50
Converge ICT Solutions, Inc.14.90
Coal Asia Holdings, Inc.0.29
Cosco Capital, Inc.5.65
Century Properties Group, Inc. Pref. A110.00
Cebu Property Venture and Dev’t Corp.”A”6.80
Crown Asia Chemicals Corporation1.87
Citystate Savings Bank8.48
Da Vinci Capital Holdings, Inc.5.28
DoubleDragon Properties Corp.14.90
DoubleDragon Properties Corp. Pref.102.60
Del Monte Pacific Limited7.21
DITO CME Holdings Corp.10.90
DMCI Holdings, Inc. Pref.1,400.00
Del Monte Pacific Ltd A-1 Pref. (USD)10.00
Del Monte Pacific Ltd A-2 Pref. (USD)10.20
D.M. Wenceslao and Associates, Inc.7.60
Philab Holdings Corp.2.86
Phil. Long Distance Telephone Co. – USD10.26
Discovery World Corporation2.60
Eagle Cement Corporation14.48
Emperador Inc.10.10
San Miguel Food and Beverage, Inc.67.00
San Miguel Food and Beverage Pref1,011.00
San Miguel Food and Beverage Perp Pref 21,005.00
Ferronoux Holdings, Inc.4.08
First Gen Corporation – Series G Pref.112.90
F and J Prince Holdings Corp. ”B”3.70
First Metro Philippine Equity ETF108.00
Global Ferronickel Holdings, Inc.2.72
First Phil. Holdings Corp. Series C Pref517.50
Fruitas Holdings, Inc.1.70
Globe Telecom, Inc – Preferred ”A”5.00
Globe Telecom, Inc. – Perpetual Pref.517.00
GMA Holdings, Inc. ”PDR”5.95
Grand Plaza Hotel Corporation10.96
GT Capital Non-Voting Perpetual Pref ”A”1,000.00
GT Capital Non-Voting Perpetual Pref ”B”1,030.00
AllHome Corp.9.15
8990 Holdings, Inc.8.24
Golden Bria Holdings, Inc.441.00
Italpinas Development Corporation3.18
IPM Holdings, Inc.7.95
Jackstones, Inc.2.11
Kepwealth Property Phils., Inc.6.10
LBC Express Holdings, Inc.15.48
Leisure and Resorts World Corp.-Pref1.00
Leisure and Resorts World Corp.-Warrants1.02
Macay Holdings, Inc.8.86
Metro Alliance Hold’gs and Eqts. ”A”1.87
Metro Alliance Hold’gs and Eqts. ”B”1.93
Max’s Group, Inc.6.89
Manila Broadcasting Company11.60
MEDCO Holdings, Inc.0.38
Makati Finance Corporation2.70
Millenium Global Holdings, Inc.0.22
MerryMart Consumer Corp.6.18
Metro Retail Stores Group, Inc.1.50
Megawide Const. Corp. – Perpetual Pref.100.50
Now Corporation4.33
PAL Holdings Inc.6.55
PH Resorts Group Holdings, Inc.2.81
Shakey’s Pizza Asia Ventures, Inc.7.70
Premium Leisure Corp.0.45
Phoenix Petroleum – Non-Voting Pref. 3A100.40
Phoenix Petroleum – Non-Voting Pref. 3B103.60
Phoenix Petroleum – Perpetual Pref. 41,007.00
Phoenix Petroleum – Perpetual Pref.100.00
Globalport 900, Inc.7.30
Pryce Corporation5.01
Petron Corp. – Perpetual Pref. Series 2A1,000.00
Petron Corp. – Perpetual Pref. Series 2B1,029.00
Petron Corp. – Perpetual Pref. Series 3A1,010.00
Petron Corp. – Perpetual Pref. Series 3B1,114.00
Prime Media Holdings, Inc.0.86
Robinsons Retail Holdings, Inc.65.00
SBS Philippines Corporation5.60
Swift Foods, Inc. Conv. Pref.1.60
Pilipinas Shell Petroleum Corporation20.65
San Miguel Corporation Series 2-A Pref.74.00
San Miguel Corporation Series 2-B Pref.76.05
San Miguel Corporation Series 2-C Pref.78.00
San Miguel Corporation Series 2-D Pref.75.30
San Miguel Corporation Series 2-E Pref.75.40
San Miguel Corporation Series 2-F Pref.77.30
San Miguel Corporation Series 2-G Pref.75.80
San Miguel Corporation Series 2-H Pref.78.00
San Miguel Corporation Series 2-I Pref.76.80
San Miguel Corporation Series 1 Pref.75.50
Supercity Realty Development Corporation0.80
SSI Group, Inc.1.49
SFA Semicon Philippines Corporation1.53
Cirtek Holdings – Pref B-2 (USD)0.67
Top Frontier Investment Holdings, Inc.140.00
Harbor Star Shipping Services, Inc.1.55
Wilcon Depot, Inc.16.90
Xurpas Inc.0.55

Limits of P/E ratio

Planning to use P/E ratio in evaluating companies? That’s great, but here are the limits.

It does not consider risk.

So you found a company with an attractive P/E ratio. Is it a good buy? Well, that’s the pitfall of this indicator. It does not tell you the whole story. It just tells you that the company’s current market valuation is pretty close to its earnings.

And that’s not actually good because it does not take the risk brought about by corporate debts. A company with a lot of debt runs into the risk of default, i.e. that they might not have the ability to pay, or have its income eaten away by its debt obligations.

It excludes forecast.

The P/E ratio does not take into account too the growth potential of the company, which is one of the key aspects when you’re trying to determine how much worth a business is.

Imagine for example two companies with the same P/E ratio. If one is predicted to hit 10% growth next year and the other only 5%, how do you think investors would react when they’re deciding what price they’re going to pay? Of course the company with a higher forecast would fetch higher in the market.

But that is an information that the ratio does not capture.

Earnings can be, uhm, tweaked.

I don’t really want to dwell on this but suffice it to say that there are ways to change the P/E without a corresponding change in the business. For instance, earnings per share can be increased when the company buys the shares back. With less number of shares, earnings per share increases and the lower the P/E becomes. Yet nothing actually changes with the worth of the business.

Not to mention that there are creative ways in accounting to inflate earnings.

It is an incomplete indicator.

All in all, it isn’t just an indicator that you would want to solely rely on. For instance, it doesn’t say anything about shareholder’s equity, return on equity, or margins.


P/E ratio is a tool that gives information about the proportion of the earnings from the stock price. It’s a shorthand way to know whether the stock is trading above or below the ability of the business to produce earnings.

However, it’s never wise to use it alone. It has to be used in tandem with other indicators.