← Glossary

P/E ratio

The P/E ratio is a shorthand for how much the market is paying for each dollar of a company's earnings. A high P/E can mean the market expects strong future growth, or that the stock is expensive relative to what it currently earns — the ratio alone doesn't say which, and it isn't meaningful for a company with negative earnings.

P/E = Share price / Earnings per share

This explains what p/e ratio measures. It isn't investment advice — see the disclaimer.