NEW YORK: U.S. stock valuations are tumbling in the wake of the coronavirus-fueled market rout, but determining when equities are cheap enough to buy is a tricky proposition.
“It’s a little bit difficult to look at the P/E even for this year. The estimates are going to come down; they are still too high," said James Ragan, director of wealth management research at D.A. Davidson."It’s just so hard to even figure out what the impact is going to be." "We have no idea where earnings are going at all," said Lindsey Bell, chief investment strategist at Ally Invest."We are probably not even going to get clarity on it until maybe Q1 reporting season ... and even then I wouldn’t be surprised to see a lot of companies just pull guidance."
While price-to-earnings valuations are a moving target, the extent of the drop has enticed investors seeking a potential bargain, particularly those who can hold stocks for a long time. “We are getting to the point where stocks are already compelling economically even if the emotional context may still take them down further.”
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