What's the difference between PE (price/earnings) and ROE (return on shareholder's equity)?

Question

Isn't earnings just another name for returns? and isn't the shareholder's equity the same as price?

Answer 1

"price/earnings ratio. The most common measure of how expensive a stock is. The P/E ratio is equal to a stock's market capitalization divided by its after-tax earnings over a 12-month period, usually the trailing period but occasionally the current or forward period. "

"Return on Equity. A measure of how well a company used reinvested earnings to generate additional earnings, equal to a fiscal year's after-tax income (after preferred stock dividends but before common stock dividends) divided by book value, expressed as a percentage. It is used as a general indication of the company's efficiency; in other words, how much profit it is able to generate given the resources provided by its stockholders. investors usually look for companies with returns on equity that are high and growing. "

Answer 2

P/E is short for the ratio of a company's share price to its per-share earnings. To calculate the P/E, you take the current stock price of a company and divide by its earnings per share.

Return on equity reveals how much profit a company earned in comparison to the total amount of shareholder equity found on the balance sheet.

Answer 3

For Earning per share, you can find it in the Income statement of a company,
We usually use non-diluted EPS in calculating PE ratio.

For ROE, you can find the book value of equity in the balance sheet.

Answer 4

PE ratios use the market price of equity. ROE uses the book value of equity.

Answer 5

return is on yearly basis and price/earning's is the when it changes on the market. for more tips on investing and anything else that is associated with this topic you find on this article. hope it helps you

Answer 6

Check out Wikipedia...