price-earnings ratio

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Related to Price-Earnings: price-earnings ratio, Forward Price to Earnings

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 ?
Ang and Bekaert (2003) discussed the reliability of using price-earnings ratio to predict future dividend growth.
While one could simply dismiss this observation as irrelevant to outside investors, the historical record suggests that top executives may be on to something: over longer time periods, stocks with low price-earnings ratios and low market-to-book ratios have outperformed the more glamorous issues characterized by high valuation ratios.
In analyzing the appropriate price for the company's stock, a security analyst will restate the stock price formula as the product of the estimated earnings and a multiple of the price-earnings rang.
The company's price-earnings ratio, based on the profits of the last 12 months, has risen to 80 today from 30 at the end of 1995.
8 average price-earnings ratio for the Standard and Poor's 500 stock index.
While listed stocks trade, in general, at about 17 to 20 times earnings, Herr said, the price-earnings ratio for the unlisted stocks in which he makes markets is likely to be five to eight times earnings.
We believe these programs make sense and have the potential to effect an increase in the price-earnings multiple of the shares.
By definition they are shares of companies whose earnings are growing at several times the economy's growth rate, pay little or no dividend and have high price-earnings, P/E, ratios.
33, which would represent a price-earnings multiple of 21 times our calendarized 2004 EPS estimate.
In this challenging market climate fund managers are increasingly focused on finding companies that are trading at a discount to book or net asset value, have low price-earnings and cash flow multiples, and are headed by a solid, talented management team.