Search
Search for an ETF or holding
Search for an ETF or holding
Updated 1mo ago.
Updated 1mo ago.
The price-to-earnings (P/E) ratio compares a stock's price to its earnings per share over the last 12 months. A P/E of 20 means investors pay $20 for every $1 of annual profit. Used to compare valuation — a high P/E can signal growth expectations or overvaluation; a low P/E, undervaluation or problems. Always compare within the same sector.
A $40 stock with $2 EPS has a P/E of 20: you pay $20 for each dollar of annual profit. A growth stock can hit 40-50, a value stock 8-12.
It's the best-known valuation ratio. A high P/E reflects either strong growth expectations or overvaluation; a low P/E, a bargain or problems. Never compare P/E across different sectors — compare a bank to a bank.