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Price-to-earnings Ratio (Noun)

Meaning

(stock market) the price of a stock divided by its earnings.

Classification

Nouns denoting relations between people or things or ideas.

Examples

  • Investors analyze a company's price-to-earnings ratio to gauge if its stock is undervalued or overvalued.
  • A low price-to-earnings ratio can signal to investors that the company is likely to see a stock price increase.
  • Historical data has shown a higher average price-to-earnings ratio in technology companies than other industries.
  • Market trends reveal companies that offer consistently growing profits are traded with significantly high price-to-earnings ratios.
  • Calculating a stock's price-to-earnings ratio often entails forecasting projected profits based on expected dividends or trends within an economic industry.

Synonyms

  • P/E Ratio
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