Price to Earnings

What is Price to Earnings Ratio?

The P/E ratio compares a company’s stock price to its earnings per share (EPS). It tells investors how much they are paying for each dollar of the company’s earnings, which helps assess the stock’s valuation. A higher P/E may indicate that the stock is expensive or that investors expect high growth. A lower P/E may suggest the stock is undervalued or facing challenges.

Formula:
P/E Ratio = Price per share / Earnings per Share