Adjusting P/E for regional differences
Guys,
My comp analysis has companies based in India as well as the US (same industry). Do I have to adjust for regional differences? If so, how?
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Of course you do. Companies based in India should trade at a lower multiple than US for many reasons but hers a few example: 1) higher inflation rate in emerging markets than US thus you want higher return which would in effect reflect lower PE than same company in US; 2) political risk and instability in emerging markets; 3) can't remember anymore off the top of my head
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