Equity Valuation Using Multiples in the Emerging Market of the United Arab Emirates
Omran M. F.
Additional contact information
Omran M. F.: College of Business and Management, University of Sharjah
Review of Middle East Economics and Finance, 2003, vol. 1, issue 3, 72-88
This study offers some preliminary results about stock valuation in the emerging market of the United Arab Emirates. It examines the determinants of three valuation multiples in the period from 1996–2001, the price sales (PS), the price book value (PBV) and the price earnings (PE). Consistent with economic theory it is found that (1) the PS is positively significantly related to net profit margin; (2) the PBV is positively significantly related to return on equity; and (3) PE is positively significantly related to the payout ratio. The PE proved to be the most difficult to model because of the existence of outliers. These outliers can be explained by two extreme cases: Case 1, companies that have very low payout and growth rates, and still achieve the highest PE ratios; Case 2, companies that tend to pay far more in dividends compared to what they achieved in profit. Abu Dhabi Islamic bank seems to be trading at higher PE and PS multiples compared with commercial banks due to its clientele appreciation of its services rather than the net profit margin achieved or the dividends paid. Judged by R2 and statistical evidence, the PBV and PS valuation models stand a better chance of explaining and possibly predicting prices in the UAE than the PE model.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed
Downloads: (external link)
For access to full text, subscription to the journal or payment for the individual article is required.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bpj:rmeecf:v:1:y:2003:i:3:n:5
Ordering information: This journal article can be ordered from
Access Statistics for this article
Review of Middle East Economics and Finance is currently edited by Ghassan Dibeh
More articles in Review of Middle East Economics and Finance from De Gruyter
Bibliographic data for series maintained by Peter Golla ().