A Screen on P/E Buys ROE and B/P

Investors who screen on multiples fail to see that accounting numbers in the multiples are codetermined in the double entry accounting system. P/E (or E/P) is a common screen and so is P/B (or B/P). But so a screen on E/P is the same as screening on ROE and B/P; the screener is essentially employing two screens. This decomposition of the screen identifies the fundamentals underlying the screen. This book has gone to lengths to explain the risk and return fundamentals behind ROE and B/P. That is what the investor is buying in screening on E/P.