U.S. Markets closed

Should You Buy Qiwi plc (QIWI) At This PE Ratio?

Cole Patterson

Qiwi plc (NASDAQ:QIWI) is currently trading at a trailing P/E of 20.8x, which is lower than the industry average of 29.4x. Although some investors may jump to the conclusion that this is a great buying opportunity, understanding the assumptions behind the P/E ratio might change your mind. In this article, I will break down what the P/E ratio is, how to interpret it and what to watch out for. See our latest analysis for QIWI

Demystifying the P/E ratio

NasdaqGS:QIWI PE PEG Gauge Oct 7th 17

The P/E ratio is a popular ratio used in relative valuation since earnings power is a key driver of investment value. By comparing a stock’s price per share to its earnings per share, we are able to see how much investors are paying for each dollar of the company’s earnings.

P/E Calculation for QIWI

Price-Earnings Ratio = Price per share ÷ Earnings per share

QIWI Price-Earnings Ratio = 16.24 ÷ 44.883 = 20.8x

The P/E ratio itself doesn’t tell you a lot; however, it becomes very insightful when you compare it with other similar companies. Our goal is to compare the stock’s P/E ratio to the average of companies that have similar attributes to QIWI, such as company lifetime and products sold. A quick method of creating a peer group is to use companies in the same industry, which is what I will do. QIWI’s P/E of 20.8x is lower than its industry peers (29.4x), which implies that each dollar of QIWI’s earnings is being undervalued by investors. Therefore, according to this analysis, QIWI is an under-priced stock.

Assumptions to be aware of

While our conclusion might prompt you to buy QIWI immediately, there are two important assumptions you should be aware of. The first is that our “similar companies” are actually similar to QIWI, or else the difference in P/E might be a result of other factors. For example, if you are comparing lower risk firms with QIWI, then its P/E would naturally be lower than its peers, as investors would value those with lower risk at a higher price. The second assumption that must hold true is that the stocks we are comparing QIWI to are fairly valued by the market. If this does not hold, there is a possibility that QIWI’s P/E is lower because our peer group is overvalued by the market.

What this means for you:

Are you a shareholder? If your personal research into the stock confirms what the P/E ratio is telling you, it might be a good time to add more of QIWI to your portfolio. But keep in mind that the usefulness of relative valuation depends on whether you are comfortable with making the assumptions I mentioned above.

Are you a potential investor? If QIWI has been on your watch list for a while, it is best you also consider its intrinsic valuation. Looking at PE on its own will not give you the full picture of the stock as an investment, so I suggest you should also look at other relative valuation metrics like EV/EBITDA or PEG.

PE is one aspect of your portfolio construction to consider when holding or entering into a stock. But it is certainly not the only factor. Take a look at our most recent infographic report on Qiwi for a more in-depth analysis of the stock to help you make a well-informed investment decision. Since we know a limitation of PE is it doesn't properly account for growth, you can use our free platform to see my list of stocks with a high growth potential and see if their PE is still reasonable.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.