Implied market cap
What does the implied market capitalization from P/E an P/B tell you?
Thanks
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How much the market cap should be for company X based on the P/E or P/B ratios for the industry average.
Is the question getting at the difference between market value and book value? As in P/E is a way to get at a price based on net income versus P/B gets at a price based on book value of the firm (two very different metrics).
It seems like the implied market cap from P/E is much higher than P/B. Is there any reason for it?
How would you explain the implied market cap difference between the two if someone asks?
I'm trying to value a bank using P/E and P/B.
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