price-earnings ratio

(redirected from Price-Earnings)
Also found in: Dictionary.

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 ?
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.
The purpose of the study is to examine the reliability of beta as a measure of risk by predicting the stock price movement during negative price swings and to test the predictive power of a price-earnings ratio as a measure of risk during the same period.
This article examines the historical relationship between price-earnings ratios and subsequent stock market performance and discusses why history might not repeat itself this time.
By themselves, price-earnings ratios are not only meaningless as predictors of market value or the fairness of market prices, they can lead investors into misperceptions of which alternatives provide the most attractive returns for their available funds.
The other factor in the price formula is the price-earnings ratio.
Quote Track provides company news and vital information, such as projected growth rate, projected earnings, operating income and price-earnings ratio.
Commission 10-K extracts, earnings-per-share estimates and price-earnings forecasts for thousands of publicly traded companies.
For example, the Japanese stock market places very high price-earnings ratios on Japanese equities, and some have argued that the resulting lower cost of equity capital gives Japanese firms a competitive edge over U.S.
The average price-earnings ratio (PER) or price earnings multiple for the 30-component stocks of the PSEi has now fallen to 18.14x.
Based on some preliminary findings, such firms have lower price-earnings ratios and smaller appreciations in market value over time than profit-oriented firms.
Suppose the price-earnings multiple, M, is 15, and L equals one-half a year's earnings (k: .5), L = .5 x E.