Some limitations of the P/E method of valuing stocks include all of the following except

Question

Quizplus · Accepted Answer

The P/E method of valuing stocks does not take into account dividend payments, so the difficulty in forecasting them is not a limitation of this method. Difficulty in selecting industry peers for deriving the mean P/E, determining the proper P/E for a stock, and forecasting earnings are all potential limitations of this method.

Some Limitations of the P/E Method of Valuing Stocks Include