Naked PE
Naked price/earnings is a valuation measure for stocks which aims to identify the companies whose earnings have been extremely undervalued by the market. It strips out the influences of the year in which the P/E was measured and also discounts the size of the company and its sector. The lower a company’s naked P/E the more undervalued it is. However, this method only works for small concentrated portfolios which hold less than 10 shares. Naked P/E was proposed by academic Keith Anderson in 2005.
This definition is for general information purposes only