In today’s briefing:
- Stock Prices Driven by Expectations Require Support from Actual Corporate Performance
Stock Prices Driven by Expectations Require Support from Actual Corporate Performance
- The P/B ratio, which rose alongside the stock price increase, climbed to 1.4 in October 2025, but this merely matched the level seen from February 2024 to May 2024.
- Despite stagnant actual EPS, BPS and ROE, rising stock prices pull up P/E and P/B. Correlation with P/B suggests that appealing to expectations of stock prices—over actual numbers—is more effective.
- Whether current valuations are reasonable or if there is further upside potential depends on changes in future expectations and how these are factored into actual results.
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