Originally Posted by
winner69
Heartland's FY21 Real ROE was 8.6% (Nominal reported 11.9% less inflation 3.3%)
This year assuming a nominal 12.0% ROE and say 7.0% inflation the F22 Real ROE is 5.0%
If one assumes that Real PE ratios are reflective of company performance the Nominal PE (adjusted for inflation) should be lower than the Real PE
This nominal / real stuff flows through to PE ratios as well - which implies the PE of 15 HGH was trading on late last year should now be less than 10 --- meaning a share price of $1.60 is possible
Theoretical stuff so no worries ..... but ask your self why do PE ratios tend to decline in times of high inflation.