investing
price-to-earnings ratio
A valuation metric comparing a company's stock price to its earnings per share, used to assess if a stock is over or undervalued.
Example
"The stock had a high P/E ratio of 50, suggesting investors expected strong future growth."
💡 Memory Tip
P/E = how much you PAY (price) for each dollar of EARNINGS. High P/E means expensive stock.
Etymology
Price (market cost) + to + earnings (profit) + ratio — the proportion of price to earnings.
Common Misspellings
price to earnings rationprice to earings ratiop/e ratioPE ration
Related Terms
See Also
growth