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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

multiple

1. In stock-index futures, the number multiplied by the futures price to determine the value of the contract. For example, the \$500 multiple of the Standard & Poor's Midcap Index is multiplied by the futures price to determine the value of one contract. Thus, a futures price of \$230 would yield a contract value of \$115,000 (\$500 × \$230).

Multiple.

A stock's multiple is its price-to-earnings ratio (P/E). It's figured by dividing the market price of the stock by the company's earnings.

The earnings could be the actual earnings for the past four quarters, called a trailing P/E. Or they might be the actual figures for the past two quarters plus an analyst's projection for the next two, called a forward P/E.

Investors use the multiple as a way to assess whether the price they are paying for the stock is justified by its earnings potential. The higher the multiple they are willing to accept, the higher their expectations for the stock.

However, some investors reject stocks with higher multiples, since it may be impossible for the stock to meet the market's expectations.

References in periodicals archive ?
For lighting effects, Shimrod101 uploaded a mod that improves overall lighting on "The Sims 4.
But there was a late-70s revival under the influence of The Jam and their frontman Paul Weller, and in the 1990s Mod culture regained mass appeal when Blur and Oasis spearheaded the Mod-inspired Britpop movement.
For many, being a Mod is a way of life with music and fashion at the centre of it all, and for many, the scooter is the chosen mode of transport.
To me, being a Mod means having a good time, having a bit of respect and pride in myself and just really digging the scene I'm into.
We have had a lot of positive responses with our Plume and Bellow mods, and we are now extremely excited about releasing the Carbon40 this week," stated Adams.