Is There A Better Way to Look at PE Ratios?

This approach also helps to make PE ratios easier to compare across sectors or geographic regions. After all, the retention ratio is not only far different than what it was decades ago, but it can often vary widely by sector or country. The Bianco PE helps to mitigate this issue in a way that others do not attempt to address.

Bottom Line

While the PE ratio is useful, there have been some attempts at improving this metric over the years. The Shiller PE is arguably the most famous of these efforts, but some investors might be better served by investigating the Bianco PE instead.

This iteration of the PE ratio looks to address the elements of inflation and disparate accounting methods to achieve a more holistic picture. It may also be more useful when comparing different national markets or sectors, meaning that this updated PE ratio could be a metric worth adding to an investor’s toolkit.