Interview Question about P/E
Not sure how to answer this question, seems pretty basic but maybe I am overthinking it. Question is "if I had 4 companies, 3 had 10 P/E and 4th had 20 P/E, what's the first thing you would ask?" I know various things can affect the P/E like growth, risk, shares outstanding, industry etc..but I honestly don't know what would be the first question to ask. Any insight would be appreciated.
First thing that comes to mind is "what is different about company 4 vs the other 3?". As you said, there's a massive amount of things that could impact the P/E and so there's probably not one thing that immediately should be asked about. It's more likely that there is something that differentiates company 4 and getting an idea of what that is should be important.
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