P/E ratio

A number that compares a share's price with the profit it earns. A higher number means you pay more for each bit of profit.

The fuller meaning

Share price divided by earnings per share: how many years of current profit the price pays for. It is meaningful only against peers, the company's own history and expected growth; a high P/E can be justified by growth and a low one can be a value trap.

P/E ratio, also called P/E, price-to-earnings ratio, price-to-earnings.

P/E ratio

The fuller meaning

Related words