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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 ?
To ensure continuous data access when a disk drive fails, multiple initiators have long been used in enterprise computing to provide disk drive access to multiple hosts and host bus adapters or both--an approach that requires the installed devices support the SCSI command set to have the capability to support I/O requests from more than one controller at a time.
And parents of multiples need to be especially aware - they're already putting up with even more sleep deprivation, stress of crying and physical demands - especially if breast-feeding.
Howard DE and Wang MQ, Multiple sexual-partner behavior among sexually active US adolescent girls, American Journal of Health Behavior, 2004, 28(1):3-12.
Multiple myeloma is characterized by a proliferation of plasma cells that produce M proteins and an overproduction of myeloma protein and immunoglobulin.
Conduction aphasia in multiple sclerosis: A case report with MRI findings.
Multiple listing services operate with a staff of trained personnel who are able to differentiate between various types of listings (exclusive right to sell, exclusive agency and open listings).
The worker with multiple chemical sensitivities: an overview.
The ITFA will enable the Internet to continue to grow without the threat of multiple and discriminatory sales taxes.
However, the idea that low uric acid concentrations cause multiple sclerosis is controversial, says neuroimmunologist Henry F.
Invested capital multiples are calculated by dividing the market value of invested capital (i.
The study helps executives estimate Multiple Myeloma market potential, assess unmet need, develop drug forecasting models, and build population-based health management frameworks.
com) has announced that it has started volume shipments of the compact Cuda 1000 Cable Modem Termination System (CMTS) to multiple systems operators (MSO) in the United States and Europe, including WideOpenWest (WOW) with systems in Illinois, Michigan and Ohio.

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