Financial Glossary  
           
 Glossary Tutorials Articles About Advertise Contact
Browse the largest investing glossary online.   Search
A
1|2|3
B
1|2
C
1|2|3
D
1|2|3
E
1|2|3
F
1|2|3
G
1|2|3
H
1|2|3
I
1|2|3
J
1|2
K
1|2|3
L
1|2|3
M
1|2|3
 
N
1|2|3
O
1|2|3
P
1|2|3
Q
1|2
R
1|2|3
S
1|2|3
T
1|2|3
U
1|2|3
V
1|2|3
W
1|2
X
1|2
Y
1|2|3
Z
1|2
#
1|2

 
Include Definitions
(more results)
Browse by Category
 
Investing / Investments
Real estate investing
Stock investing
Investment management
Retirement investing
Bonds / bond funds
Mutual Funds
 
Personal Finance
Business and finance
Household finance
Mortgage
Finance dictionary
Corporate finance
Financial service
Money management
Estate planning
Loans
 
Stock Market Investing
Stock research
Stock trading
Stock options
Stock trading
Stock exchanges
 
 
InvestHub.com's
Finance Dictionary and Glossary of Investment Terms

P/E ratio  

Definition 1.

Current stock price divided by trailing annual earnings per share or expected annual earnings per share. Assume XYZ Co. sells for $25.50 per share and has earned $2.55 per share this year; $25.50 = 10 times $2.55. XYZ stock sells for ten times earnings.
 

Definition 2.

Also known as the P/E multiple, this is the latest closing price divided by the latest 12 months'' earnings per share. P/E is perhaps the single most widely used factor in assessing whether a stock is pricey or cheap. A company''s P/E should be looked at against those of similar companies, and against that of the stock market as a whole, since different industries and even different companies are characterized by markedly different P/Es. In general, fast-growing technology companies have high P/Es, since the stock price is taking account of anticipated growth as well as current earnings. High-tech companies often trade at P/Es above 40, or about double the overall market P/E. Banks, on the other hand, typically have below-market P/E ratios.A high P/E is often a reflection of lofty expectations for a stock, since no one would invest knowing it would take 40 years just to make one''s money back. The idea is that earnings will grow. A high P/E can also reflect poor recent earnings. A low P/E can imply low investor expectations, an undervalued stock, or both. Some investors like to compare P/E to the growth of earnings per share. The resulting PEG ratio (P/E divided by growth rate) gives some idea of whether investor expectations are reasonable given past performance. Value investors sometimes say that a PEG ratio of less than one means a stock is cheap.
 

Definition 3.

See price/earnings ratio
 
  Home | Glossary | Tutorials | Articles | About
Webmasters |Advertise | Contact | Privacy


All material Copyright InvestHub.com and IAT Inc., 2003-2014