PE ratio

The price-to-earnings ratio is the ratio of the share price of a company to its earnings per share. It is used by investors or analysts for comparing the valuation of a company relative to its peers. Generally, a high P/E ratio might mean that a company's stock is overvalued or that investors are expecting high growth rates in the future and vice versa.

The PE ratio is a metric used by investors and analysts for valuing a stock. The PE ratio is calculated by dividing the current share price by the earnings per share. It is basically the price which investors are willing to pay for the company’s past or future earnings. Usually, a high PE ratio means that a stock is overvalued or the markets expect the company’s earnings to grow strongly.

Answered on 2022-08-04