Price to Earnings Ratio (P/E)

Parent term
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