Industry P/E ratio refers to the ratio of total market value to total net profit (calculated by converting the latest quarterly value into annual value) of listed companies in the same industry. This is the key factor affecting the fundamental stock price. Generally, arithmetic average or weighted average method is used to calculate the industry P/E ratio. However, due to the small number of listed companies in most industries in China, and the calculation of the average is easily affected by extreme data, the calculation results may be biased.

Industry P/E ratio (excluding losses) refers to the ratio of total market value to total net profit of listed companies in the industry after excluding loss-making enterprises (calculated by converting the latest quarterly value into annual value).

Application analysis of industry P/E ratio P/E ratio is an important index to evaluate the input value of industry. In industry analysis, the relative comparison between industry P/E ratio and market P/E ratio is often used to judge the pros and cons of the industry. The smaller the price-earnings ratio of the industry is, it is far less than the average or median value of the market, indicating that the overall profitability of the industry is better and the investment crisis is lower.

Considering comparability, the industry P/E ratio (excluding losses) needs to be compared with the market P/E ratio (excluding losses). Investors can find industries with low P/E ratio by comparing the P/E ratio, so as to dig deep into the input value of the industry.

The approximate estimation of industry P/E ratio can be based on the increase and decrease method, that is, on the basis of market average P/E ratio, considering the influence of some factors, increase and decrease can be implemented. The most important factors of industry increase or decrease are industry growth rate and stability. If the industry growth rate is high, you can add some to the average market price-earnings ratio, and you can also add some to the stable ones; On the contrary, it will decrease. As for the increase or decrease, it needs to be judged by experience.

Such as tourism. China's tourism industry has a good prospect, and the expected growth rate of the industry in the next few years is high, so you can get extra points; Moreover, tourism is a relatively stable industry, which is only related to the macroeconomic cycle and can also be joined. Therefore, the average P/E ratio of China tourism industry can probably reach 18-20 times.

Another example is the steel industry. The expected growth rate of the steel industry in the next few years is a little lower than the economic growth rate, and the performance fluctuates greatly, so both of them should be lowered, so the average P/E ratio of the industry is relatively low, even 5-6 times at the lowest.