# price-earnings ratio

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Related to Price Earnings Ratio: Payout ratio, Dividend yield, Dividend payout ratio, Earnings per share

## Price-earnings ratio

Shows the multiple of earnings at which a stock sells. Determined by dividing current stock price by current earnings per share (adjusted for stock splits). Earnings per share for the P/E ratio are determined by dividing earnings for past 12 months by the number of common shares outstanding. Higher multiple means investors have higher expectations for future growth, and have bid up the stock's price.

## Price-Earnings Ratio

The price of a security per share at a given time divided by its annual earnings per share. Often, the earnings used are trailing 12 month earnings, but some analysts use other forms. The P/E ratio is a way to help determine a security's stock valuation, that is, the fair value of a stock in a perfect market. It is also a measure of expected, but not realized, growth. Companies expected to announce higher earnings usually have a higher P/E ratio, while companies expected to announce lower earnings usually have a lower P/E ratio. See also: PEG

## price-earnings ratio (P/E ratio)

A common stock analysis statistic in which the current price of a stock is divided by the current (or sometimes the projected) earnings per share of the issuing firm. As a rule, a relatively high price-earnings ratio is an indication that investors believe the firm's earnings are likely to grow. Price-earnings ratios vary significantly among companies, among industries, and over time. One of the important influences on this ratio is long-term interest rates. In general, relatively high rates result in low price-earnings ratios; low interest rates result in high price-earnings ratios. Also called earnings multiple, market multiple, multiple, P/E ratio. See also forward P/E, trailing P/E.

## price-earnings ratio

a ratio used to appraise a quoted public company's profit performance, which expresses the market PRICE of the company's SHARES as a multiple of its PROFIT. For example, if a company's profit amounted to £1 per share and the price of its shares was £10 each on the STOCK MARKET; then its price-earnings ratio would be 10:1. Where a company's prospects are considered by the stock market to be good, then it is likely that the company's share price will rise, producing a higher price-earnings ratio. Price-earnings ratio is the mirror image of EARNINGS YIELD. See EARNINGS PER SHARE.

## price-earnings ratio

a ratio used to appraise a quoted public company's profit performance that expresses the market PRICE of the company's SHARES as a multiple of its PROFIT. For example, if a company's profit amounted to £1 per share and the price of its shares was £10 each on the STOCK EXCHANGE, then its price-earnings ratio would be 10:1. Where a company's prospects are considered by the stock exchange to be good, then it is likely that the company's share price will rise, producing a higher price-earnings ratio. The price-earnings ratio is the mirror image of EARNINGS YIELD. See EARNINGS PER SHARE.
References in periodicals archive ?
Analysts' target price for the group range around the 37 euros to 40 euros mark, while the company is trading on a price earnings ratio of 10.
At the other end of the spectrum, public companies have seen their average price earnings ratios fall from an average of 18.
However, a significant portion of variance in price earnings ratio remained unexplained, suggesting that other variables might be explored.
50 per share on December 31, 1989, and \$33 per share on December 31, 1990, the price earnings ratio would be calculated as shown in Figure 4.
But are the shares, which trade on a price earnings ratio of 27 times for the current year, overvalued?
The price earnings ratio on the new target price is 17 times, which is reasonable for a food processing stock considering the anticipated strong relative earnings performance.
The new ETN uses an index that incorporates the cyclically adjusted price earnings ratio, CAPE ratio, to assess equity market valuations of nine sectors on a monthly basis.
Its shares have risen from a 52- week low of 310p to close last week at 475p,and trades on a price earnings ratio of 23.
The share price translates into a price earnings ratio of 11.
5p they trade on a price earnings ratio of 22 which may seem high, but it reflects a successful track record and decent growth.
B) -- Price earnings ratio is based on annualization of the most recent quarter's net earnings per fully diluted share and end of period stock price.

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