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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 ?
Multiple risk behavior was more common among students with disabilities than their nondisabled peers in both age groups (results were statistically significant: younger age group: 8.
All youth in this study of aspirations had been exposed to multiple risk influences and showed significant adjustment difficulty.
Little, however, is known about predictors of such multiple risk activities (Galambos & Tilton-Weaver, 1998).
4) This tendency for risk factors to cluster and exert a significant impact on CHD reinforces the need to identify and concurrently treat multiple risk factors to target goals.
Because they are subjected to multiple risk factors, these children may become more violent.
It suggests that cholesterol screening confers benefits primarily on people with a high short-term risk of dying from heart disease-survivors of a heart attack and middle-aged men with multiple risk factors.
Relative benefit of CPX-351 in previously untreated AML is greatest in patients with multiple risk factors --
Contract notice: Multiple Risk Prevention and Education Contract Glasgow City.
Clinicians might recalibrate the algorithm so that it tracks more closely with contemporary evidence, simultaneously calculate multiple risk algorithms as currently done in some Mayo Clinic prevention programs, or elect to ignore the problem and accept that more persons will be treated with a class of drugs proven to reduce vascular event rates.
Additionally, the company said that the new programme offering will provide primary casualty insurance to multiple risk management buyers who seek to implement a single captive reinsurer to retain risk.
The most effective fall-prevention programs include exercise, review of or changes in the patient's medications, and education that targets multiple risk factors.
Sometimes it's fairly obvious--for instance, those with vascular disease (history of angina, heart attack, bypass surgery, stroke) or multiple risk factors (high blood pressure, smoking, diabetes, high cholesterol, worrisome family history) are likely to benefit, especially if they do not have a history of previous gastrointestinal bleeding, ulcers, or regular use of anti-inflammatory medications.

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