The Influence of Earning Per Share (EPS) and Price Earnings Ratio (PER) on Stock Prices in the Food and Beverage Sector on the Indonesian Stock Exchange (BEI) for the 2015-2019 Period
DOI:
https://doi.org/10.55208/jeme.v2i1.145Keywords:
Earnings Per Share, Price Earnings Ratio, Stock PriceAbstract
The objective of this study is to examine the impact of earnings per Share (EPS) and Price Earnings Ratio (PER) on the stock prices of companies in the food and beverage industry listed on the Indonesia Stock Exchange (BEI) from 2015 to 2019. EPS is utilized as a metric to gauge the profitability of each share, whereas PER characterizes the market's assessment of the earnings generated per share. The research employed a descriptive verification analysis method, utilizing a sample of seven prominent organizations within the researched sector.
The data utilized is derived from the yearly financial reports of each company, specifically secondary data. The investigation employed multiple regression approaches to examine the hypothesis regarding the impact of EPS and PER on stock prices. The test utilizes the coefficient of determination to ascertain the extent to which the regression model can account for the fluctuations in stock prices.
The research findings indicate a substantial correlation between EPS (Earnings Per Share), PER (Price Earnings Ratio), and firm share prices within the food and beverage industry on the IDX (Indonesia Stock Exchange). The R^2 value of 0.753 suggests that 75.3% of the changes in stock prices can be accounted for by the independent variables, EPS and PER. In this industry, share prices are primarily influenced by the profitability per share and market valuation.
In addition, this study emphasizes that additional variables not investigated in this research can significantly impact stock prices, including macroeconomic conditions, market sentiment, government regulations, and other external factors. Stable macroeconomic conditions can lead to more favorable circumstances for increased stock values, whereas government policy or market sentiment alterations can profoundly influence a company's stock performance.
The recommendations derived from this study are intended for investors and corporate executives operating in the food and beverage industry on the IDX. Investors are advised to consider the earnings per share (EPS) and price-to-earnings ratio (PER) components of their fundamental analysis to make better-informed investment choices. It is recommended that companies prioritize enhancing their financial performance and ensuring openness in their financial reporting to boost market trust and raise the value of their shares.
Subsequent investigations might broaden the range by including supplementary variables like Dividend Yield or Return on Equity (ROE) while doing a more extensive analysis of qualitative elements that impact market perceptions of EPS and PER. This research contributes to understanding the factors that impact share prices in the Indonesian capital market, particularly within the food and beverage industry.
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