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.