Price/Earnings Ratio (P/E Ratio)

The Price/Earnings Ratio (P/E Ratio) is an indicator that plots a company's share price divided by the earnings per share (EPS). It is a popular measure that can be used to see if a stock is fairly valued, overvalued or undervalued. A general interpretation is that a company with a high P/E Ratio is expected to have higher earnings growth in the future. It is important to note that this ratio isn't necessarily meant to be used by itself. It can be used to compare it across several different companies in order to gauge value.



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