This has never been seen in Borsa Istanbul: Profit has increased, price has bottomed out

There are quite interesting developments in Bist100 shares, which are traded on the stock exchange. Today, with the index depreciating by 10.3 percent, the benchmark index dropped to 4,425 points. This level means that it is just 2.6 percent away from the near-term low of 4,311 points on May 3, when the markets shook. In dollar terms, the distance from the same bottom is only 1 dollar! When we look at the source of this decrease, we see the general, that is, the deepening decline in the stocks included in the Bist100 index. The interesting thing is that most of the stocks except Bist100 do not have this depth of decline. Unless of course we pay attention to some speculative movements.

So how much did these decreases make the shares in Bist100 cheaper?

There are different ways to measure this. For example, it is also possible to look at the price movements between two dates. But this does not fully correspond to the concept of “cheapening”. Because it is far from being a data that can give us an answer as to whether these price drops are due to any loss of financial performance. In addition, considering that there are newly announced balance sheets (ie the first quarter of 2023) between the two dates, the business turns around and reaches a ratio that can evaluate price and financial performance at the same time: In other words, the price/earnings (p/k) multiplier.

We analyzed the price/earnings ratio of Bist100 stocks for the readers of Kriptokoin.com since March 6, 2023, when some stocks, known as the indicator of the index, mostly tested their peaks.

62 percent have f/k below the industry average

Accordingly, 82 of the stocks in Bist100 have become cheaper on the basis of the f/k multiplier. While this decrease is up to 97 percent on a price/earnings basis in some stocks, it is at the level of 1-2 percent in some stocks. On the contrary, we see that the price/earnings ratios of 12 stocks have increased in this date range.

We also calculated whether each stock was below or above the industry average to test whether stocks with a decreasing P/E ratio were already seen as expensive compared to industry averages in terms of p/k. Accordingly, it was noted that 62 of the 82 stocks whose price/earnings ratio decreased were below the sector average.

Non-Bist100 stocks are getting cheaper

This actually brought us another result: If 62 of Bist100 stocks are below the industry average on price/earnings basis, then the stocks other than Bist100 still keep the industry average above the industry average. In other words, while the stock market is falling with Bist100 shares, non-Bist100 shares are not as cheap as bluechip shares in terms of valuation. Here is the valuation ratio of all Bist100 shares, which have positive f/k in both the first quarter and the end of 2022 balance sheet, and their status relative to the industry averages.