International Journal of Innovative Research and Knowledge

Volume-4 Issue-7, July 2019

Title: A Study on the Impact of Price Earnings Ratio on Stock Returns in Oil sector in Muscat Securities Market

Author: Dr. Soofi Asra Mubeen, Dr. Lina George & Ms. Qudsia Nazneen


The Value of stock changes in the securities market through selling and buying. Most of the Investors review stock markets and performances of the companies to find out the stock returns as it affects their financial position. Price Earnings Ratio (PE Ratio) shows the potential performance of the stocks returns of the companies if the P/E Ratio is positive Investors feel safe to invest in the company as they expect potential return on their investments from the company whereas negative P/E Ratio can quickly fall in the stock returns. Investment in securities market gives the advantage of liquidity as well as the opportunity to beat the market and earn high returns but it is difficult to predict the share prices as the nature of share price movement is not independent as it effects on both factors (intrinsic and extrinsic) which has been proven to exercise influence over stock price movements (Malhotra, N., Tandon, K. 2013). This study is an attempt to understand if there is any effect of PE ratio on Stock Returns. The PE ratios of the five oil companies listed in the Muscat Securities Market were computed annually from 2009-2018.  The companies’ yearly return was calculated for the same period.  To examine if there existed a price earning effect, the stock returns was compared with the PE ratio. After conducting Correlation and Regression analysis for the listed oil companies from MSM, the results revealed that PE ratio and Stock Returns had a high positive correlation for only one company and there did not exist relationship between the PE ratio and the Stock Returns for other companies and hence it is concluded that the PE ratio may or may not influence the stock returns.

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ISSN: 2213-1356

Publisher: Scholar Touch Publishers

Area/Scope: Business, Economics & Management; Social Science, Literature, Arts & Humanities; Engineering & Technology; Life Science & Physical Science, Health & Medical Science

Frequency: Monthly

Format: Online & Print

Language: English

Review Process: Double Blinded

Access: Open Access