Multiples


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Related to Multiples: Common multiples

Multiples

Another name for price/earnings ratios.

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
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Common equity multiples are calculated by dividing the stock price by various equity-specific earning levels.
Will you get your money's worth?
states, "In this century, with the exception of the early 1930s, variations in price/earnings multiples have dominated the movements in stock prices.
What Wall Street sees when it looks at your P/E ratio

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