what is a price per earning ratio (P/E) in relation to a stock?

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what is a price per earning ratio (P/E) in relation to a stock?

2007-02-28 08:44:21 · 2 answers · asked by jjonesnow 1 in Business & Finance ➔ Investing

2 answers

It's exactly what it sounds like: the price (of the stock) divided by the company's earnings. The larger the number, the more "overpriced" the stock is to buy.

2007-02-28 08:53:05 · answer #1 · answered by Jay 7 · 0⤊ 0⤋

Divide share price by earnings per share, and you get P/E

Be careful, stocks can remain overvalued/undervalued longer than you can remain solvent!

2007-02-28 19:16:04 · answer #2 · answered by Carlos G 3 · 0⤊ 0⤋