A subset of relative valuation methods consist of comparing some simple ratio associated with a stock to the historical value of that ratio for that stock. For example, one could look at MCD’s P/E ratio over the last 10 years to get an idea of whether MCD is now “reasonably” valued compared to its own history.
There are various reasons why the P/E history could be trending up or down over various time frames, so an investor must be careful about making any definite rules. But it is still useful to know these trends before a purchase is made.
The easy way to look at historical P/E ratios for any company is simply to look at a historical P/E chart, and this can be done with BigCharts. We’ll show you how to view such a chart in the 7 simple steps listed below.