What is a good stock p e ratio

In the world of investments, a company’s price-to-earnings ratio, or P/E ratio, is a measure of its stock price relative to its earnings. If you’re trying to determine whether a stock is a good investment, the P/E ratio can help you gauge the future direction of the stock and whether the price is, relatively speaking, high or low compared to the past or other companies in the same sector. Simply put, the p/e ratio is the price an investor is paying for $1 of a company's earnings or profit. In other words, if a company is reporting basic or diluted earnings per share of $2 and the stock is selling for $20 per share, the p/e ratio is 10 ($20 per share divided by $2 earnings per share = 10 p/e). The P/E ratio of the S&P 500 has fluctuated from a low of around 6x (in 1949) to over 120x (in 2009). The long-term average P/E for the S&P 500 is around 15x, meaning that the stocks that make up the index collectively command a premium 15 times greater than their weighted average earnings.

The P/E ratio is sometimes referred to as the “multiple.” For example, a ratio of 15 means that investors are willing to pay $15 for every dollar of company earnings, for a multiple of 15. A lower ratio means that investors are paying less per dollar of company earnings, and that it will take less time for The P and E ratio measures the price of the stock divided by its trailing 12-month per-share net earnings. If a company has earned $1 a share over the last year, but its stock price has reached $10, then its P/E ratio is 10. A good P/E ratio combined with great growth numbers indicates a stock that hasn’t run up irrationally in price– yet. As investors starting out in individual stocks, the Price to Earnings ratio can be a fantastic starting point. You find a P/E ratio by dividing a stock’s share price by the earnings per share, or EPS, which is simply the total net profits from the last year divided by the total number of outstanding shares. So, if a company has a share price of $20 and an EPS of $0.50, that would give it a P/E ratio of 40. The P/E ratio is calculated simply by dividing the current price-per-share by the current earnings-per-share. With P/E ratios, there is no absolute judgment over good or bad, but stocks with lower P/E ratios are considered "cheap" stocks, regardless of what the stock price indicates. The P/E ratio helps investors determine the market value of a stock as compared to the company's earnings. In short, the P/E shows what the market is willing to pay today for a stock based on its past or future earnings. A high P/E could mean that a stock's price is high relative to earnings and possibly overvalued. The historical average for the P/E ratio for the market is about 15. Generally, all other things being equal, a P/E ratio of 15 for any given stock can indicate a fair price. However, all things are not always equal. The observed price/earnings ratios may hide many things behind the scenes and may not represent a good indicator of the value.

In the world of investments, a company’s price-to-earnings ratio, or P/E ratio, is a measure of its stock price relative to its earnings. If you’re trying to determine whether a stock is a good investment, the P/E ratio can help you gauge the future direction of the stock and whether the price is, relatively speaking, high or low compared to the past or other companies in the same sector.

The P/E ratio of the S&P 500 has fluctuated from a low of around 6x (in 1949) to over 120x (in 2009). The long-term average P/E for the S&P 500 is around 15x, meaning that the stocks that make up the index collectively command a premium 15 times greater than their weighted average earnings. The P/E ratio is sometimes referred to as the “multiple.” For example, a P/E ratio of 15 means that investors are willing to pay $15 for every dollar of company earnings, for a multiple of 15. A lower P/E ratio means that investors are paying less per dollar of company earnings, and that it will take less time for The P/E ratio is a simple calculation: the current stock price divided by the per-share earnings (the earnings for the past 12 months divided by the common shares outstanding.) For example, if a company is selling at $20 per share and the per-share earnings are $2, then the P/E ratio is 10. On the surface, a $50 stock may seem more expensive than a $20 stock but if the $50 stock earns $5 a share while the $20 stock earns only $1, using the P/E ratio, you will be able to see that the $20 stock is twice as expensive as the $50 stock. Using a stock market index as a benchmark: We can calculate the P/E ratio of the S&P 500, which gives us a sense of how “expensive” stocks are in the market in general. Comparing one stock’s P/E ratio to the S&P 500’s lets you understand if a P/E ratio is relatively high or low. If the stock currently trades for $30 per share, then the P/E ratio would simply be $30 divided by $2, or 15. Stock price and P/E ratio While a company's stock price reflects the value that investors are currently placing on that investment, One way to gauge whether a P/E ratio is good is to compare it to the market average. The average P/E ratio for the S&P 500, which is a market index that represents trading in the broader stock

The P/E Ratio Explained. The P/E is the share price of a company’s stock divided by the profits that the company earns in a year. For example, if a stock sells for $15 and the company earned 60 cents per share over the last year, the P/E is 15 divided by 0.60, which is 25.

On the surface, a $50 stock may seem more expensive than a $20 stock but if the $50 stock earns $5 a share while the $20 stock earns only $1, using the P/E ratio, you will be able to see that the $20 stock is twice as expensive as the $50 stock. Using a stock market index as a benchmark: We can calculate the P/E ratio of the S&P 500, which gives us a sense of how “expensive” stocks are in the market in general. Comparing one stock’s P/E ratio to the S&P 500’s lets you understand if a P/E ratio is relatively high or low. If the stock currently trades for $30 per share, then the P/E ratio would simply be $30 divided by $2, or 15. Stock price and P/E ratio While a company's stock price reflects the value that investors are currently placing on that investment, One way to gauge whether a P/E ratio is good is to compare it to the market average. The average P/E ratio for the S&P 500, which is a market index that represents trading in the broader stock The price-to-earnings ratio is a formula used to compare a stock valuation to the company’s industry peers and the overall market. Investors use this ratio to determine if a stock is overvalued or undervalued and to obtain insight on how much of a multiple is being paid based on the company’s earnings. The Price Earnings Ratio (P/E Ratio) is the relationship between a company’s stock price and earnings per share (EPS)Earnings Per Share Formula (EPS)The Earnings Per Share formula is a financial ratio, which counts net earnings against the total outstanding shares over a fixed period of time.

Using the Price-to-Earnings Ratio as a Quick Way to Value a Stock alike have long considered the price-earnings ratio, known as the p/e ratio for short, is the latest fad among stock analysts and a great company that may have fallen out of  

A good P/E ratio combined with great growth numbers indicates a stock that hasn’t run up irrationally in price– yet. As investors starting out in individual stocks, the Price to Earnings ratio can be a fantastic starting point. You find a P/E ratio by dividing a stock’s share price by the earnings per share, or EPS, which is simply the total net profits from the last year divided by the total number of outstanding shares. So, if a company has a share price of $20 and an EPS of $0.50, that would give it a P/E ratio of 40. The P/E ratio is calculated simply by dividing the current price-per-share by the current earnings-per-share. With P/E ratios, there is no absolute judgment over good or bad, but stocks with lower P/E ratios are considered "cheap" stocks, regardless of what the stock price indicates. The P/E ratio helps investors determine the market value of a stock as compared to the company's earnings. In short, the P/E shows what the market is willing to pay today for a stock based on its past or future earnings. A high P/E could mean that a stock's price is high relative to earnings and possibly overvalued. The historical average for the P/E ratio for the market is about 15. Generally, all other things being equal, a P/E ratio of 15 for any given stock can indicate a fair price. However, all things are not always equal. The observed price/earnings ratios may hide many things behind the scenes and may not represent a good indicator of the value.

Aug 14, 2009 Introduction to PE ratio: PE ratio is one of the most widely used tools for stock selection. It is calculated by dividing the current market price of the 

If the stock currently trades for $30 per share, then the P/E ratio would simply be $30 divided by $2, or 15. Stock price and P/E ratio While a company's stock price reflects the value that investors are currently placing on that investment, One way to gauge whether a P/E ratio is good is to compare it to the market average. The average P/E ratio for the S&P 500, which is a market index that represents trading in the broader stock

The P/E ratio is sometimes referred to as the “multiple.” For example, a ratio of 15 means that investors are willing to pay $15 for every dollar of company earnings, for a multiple of 15. A lower ratio means that investors are paying less per dollar of company earnings, and that it will take less time for The P and E ratio measures the price of the stock divided by its trailing 12-month per-share net earnings. If a company has earned $1 a share over the last year, but its stock price has reached $10, then its P/E ratio is 10. A good P/E ratio combined with great growth numbers indicates a stock that hasn’t run up irrationally in price– yet. As investors starting out in individual stocks, the Price to Earnings ratio can be a fantastic starting point. You find a P/E ratio by dividing a stock’s share price by the earnings per share, or EPS, which is simply the total net profits from the last year divided by the total number of outstanding shares. So, if a company has a share price of $20 and an EPS of $0.50, that would give it a P/E ratio of 40. The P/E ratio is calculated simply by dividing the current price-per-share by the current earnings-per-share. With P/E ratios, there is no absolute judgment over good or bad, but stocks with lower P/E ratios are considered "cheap" stocks, regardless of what the stock price indicates. The P/E ratio helps investors determine the market value of a stock as compared to the company's earnings. In short, the P/E shows what the market is willing to pay today for a stock based on its past or future earnings. A high P/E could mean that a stock's price is high relative to earnings and possibly overvalued. The historical average for the P/E ratio for the market is about 15. Generally, all other things being equal, a P/E ratio of 15 for any given stock can indicate a fair price. However, all things are not always equal. The observed price/earnings ratios may hide many things behind the scenes and may not represent a good indicator of the value.