# Valuation guide (illustrative)

A quick price-to-earnings (P/E) sanity check:

- **P/E = price ÷ trailing earnings per share (EPS)**
- **Fair value = trailing EPS × target P/E**
- **Upside/downside = (fair value − price) ÷ price**

## Typical target P/E by sector

These are rough, illustrative anchors only — not live market multiples.

| Sector                | Conservative target P/E | Growth target P/E |
|-----------------------|-------------------------|-------------------|
| Mega-cap technology   | 28                      | 35                |
| Semiconductors        | 25                      | 40                |
| Consumer staples      | 18                      | 22                |
| Financials / banks    | 11                      | 14                |
| Broad market (index)  | 19                      | 21                |

## How to read the result

- Fair value **well above** the current price ⇒ the stock looks **cheap** on this measure.
- Fair value **well below** the current price ⇒ the stock looks **expensive** on this measure.
- Within ~5% ⇒ roughly **fairly valued**.

This is one crude lens. It ignores growth rates, balance-sheet strength, and cash flow, so never
present it as a recommendation.
