- Phoenix, AZ US
While serving as the chief financial officer of Western Alliance Bancorporation, Dale Gibbons has demonstrated his proficiency at financial analysis. Dale Gibbons also has proven experience with creating value, improving efficiency, and managing risk and capital. One primary tool for evaluating a stock's worth is the price-to-earnings, or P/E ratio. The ratio is obtained by dividing the company's current price by its earnings per share. Usually it uses the last four quarters' earnings, which provides a good idea of the stock's recent performance. However, you can also calculate the ratio using expected earnings over the next four quarters, which helps in predicting growth. The first application is more accurate, but the second gives a better idea of the stock's future. A company with proven performance will have a higher ratio, while a company with sporadic earnings will have a lower one. Other indicators of a high ratio include good corporate governance, lower risks, and paying consistently strong dividends. Firms that ride out economic declines tend to have higher ratios. P/E ratios also yield valuable data on determining a stock's value relative to its industry. This is possible by comparing ratios of different companies in the same category.