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Price to Earnings Ratio (P/E)

Price to Earnings Ratio (P/E)

Abbreviation
P/E
Parent term
Valuation

The Price to Earnings Ratio is a measure of a stocks current price to historical earnings.

How to Calculate the P/E Ratio
  • Divide the company's current stock price by the companies earnings per share for the most recent 12 month period

Using the P/E Ratio
  • The P/Eratio is not as useful when valuing companies in cyclical industries

Warnings and Disclaimers

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