The use of the price-earnings relative indicator (PER) is examined to assess its utility in evaluating stock returns for similarly performing firms. The measure does seem to be a valid predictor of investment returns and eliminate bias between firms within the same industry.
Normalized Ratio, Performance, CAPM, price-earnings relative, PER, capital asset pricing model
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Peavy, III, John W. and Goodman, David A., "The Price-Earnings Relative as an Indicator of Investment Returns" (1981). Working Papers. 11.