Understanding the P/E ratio is an important step in your education of how to best value and choose what stocks you want to buy. With a solid understanding of what a P/E ratio is and how investors use it to assign a relative value to the stock, you gain important insights into a complex part of the stock market. P/E ratio is one of many factors that investors consider when valuing equities -- because it includes several indicators of stock performance, it can help make important investment decisions. It's a critical part of learning about stock valuation.


1. Defining P/E Ratio

The P/E ratio or price to earnings ratio is a way to measure a company's market price relative to its reported corporate earnings per share. It's a good ratio to use when comparing a stock to others when you're considering investing or selling off a stock.

defining p/e ratios


This site offers information designed for educational purposes only. The information on this Website is not intended to be comprehensive, nor does it constitute advice or our recommendation in any way. We attempt to ensure that the content is current and accurate but we do not guarantee its currency and accuracy. You should carry out your own research and/or seek your own advice before acting or relying on any of the information on this Website.