What is 'P/E Ratio'?

The price-to-earnings ratio (P/E ratio) is defined as a ratio for valuing a company that measures its current share price relative to its per-share earnings. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Term of the Day | Words to Know Price-to-Earnings Ratio – P/E Ratio The price-to-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings (EPS). The price-to-earnings ratio is also sometimes known as the price multiple or the earnings multiple. P/E ratios are used by investors and analysts to determine the relative value of a company's shares in an apples-to-apples comparison. It can also be used to compare a company against its own historical record or to compare aggregate markets against one another or over time. Read More » Related to "Price-to-Earnings Ratio – P/E Ratio" Using the Price-to-Earnings Ratio And PEG to Assess a Stock Learn how the price-to-earnings ratio and the PEG combined are used to assess a stock's future growth. Read More » Beware False Signals From the P/E Ratio The P/E ratio is a simple tool for evaluating a company, but it can also send false signals. Read More » Are Stocks With Low P/E Ratios Always Better? Is a stock with a lower P/E ratio always a better investment than a stock with a higher one? The short answer is no. The long answer is it depends. Read More » Related Definitions Earnings Per Share Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serve as an indicator of a company's profitability. Read More » Guidance Guidance is information that a company provides as an indication or estimate of its future earnings. Read More » Forward Price-To-Earnings Forward price-to-earnings (forward P/E) is a measure of the P/E ratio using forecasted earnings for the P/E calculation. While the earnings used in this formula are an estimate and are not as reliable as current or historical earnings data, there is still benefit in estimated P/E analysis. Read More » Trailing Price-To-Earnings Trailing price-to-earnings (P/E) is is calculated by taking the current stock price and dividing it by the trailing earnings per share (EPS) for the past 12 months. Read More » CONNECT WITH INVESTOPEDIA Email sent to: mondemand.forex@blogger.com To update your newsletter preferences or unsubscribe, click here. 114 West 41st St, floor 8 New York NY 10036 © 2019, Investopedia, LLC, All Rights Reserved | Privacy Policy