The price-earnings (PE) ratio is a value metric which defines the relationship between a stocks price and the underlying earnings of the stock. It is the amount that must pay for every 1 unit of earnings of the company. A higher PE indicates a larger expected future earnings growth.
A high PE could mean that a company is overvalued, a low PE could mean that a company is undervalued
We can compare a company’s PE to it’s industry to gauge how expensive the company is relative to that industry for an apples-to-apples comparison.
We can also compare a company’s PE to its historical PE to gauge if it is cheaper vs. history.
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Price Earnings Ratio
Definition
The price-earnings (PE) ratio is a value metric which defines the relationship between a stocks price and the underlying earnings of the stock. It is the amount that must pay for every 1 unit of earnings of the company. A higher PE indicates a larger expected future earnings growth.
A high PE could mean that a company is overvalued, a low PE could mean that a company is undervalued
Strategy
Value
Technical
Quality
Dividend
Health
Persona