CEO David Trainer sat down with Chuck Jaffe of Money Life and MarketWatch.com to talk about our Danger Zone pick this past week: Celadon Group (CGI).
Because P/E ratios are dependent upon earnings, which we know can be manipulated, they can be quite misleading. This week’s Danger Zone is a perfect of example of just how misleading those P/E ratios can be. With a P/E ratio less than half that of its industry average, this week’s Danger Zone stock, Celadon Group Inc. (CGI) would appear cheap because of strong EPS when, in fact, its cash flows are in decline and the stock is highly overvalued.