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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
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


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).
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Said Maurice Moore: "Mods never grow old and through reunions meet friends old and new, from near and far (Nottingham Mods, Newark Mods, Leicester Mods, Peterborough Mods, etc) to share their love of the music, fashion and subculture of those exciting, iconic past times; through podcasts, photographs and websites, I have tried to document this revolution in teenage culture for future generations - to recreate the good times.
The mod would go on to become immensely popular, and thanks to DayZ we'd see several similar games crop up, some of which would eventually overshadow DayZ, but we haven't forgotten what started it all.
The book, which charts mod in Wales from the 1960s through to the present day, includes notable interviews with those who were part of "the scene" in the '60s such as Welsh-born fashion designer JeffBanks and legendary Welsh musician Andy Fairweather Low.
You can also witness it firsthand thanks to the popularity of Mod Stuff which takes place in Paisley every year during The Spree festival.
To accelerate time-to-market for devices running MOD, Cyanogen has created MOD Ready, a scaling program that enables OEMs and MNOs to rapidly launch phones across a broad range of chipset platforms.
The Who have been loved by Mods for decades THE LEGACY
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.
The Lenovo Vital is a health-focused mod that lets users measure and track five vital signs such as heart rate, respiratory rate, Pulse Ox, core body temperature, and blood pressure.
Motorola has announced a new Moto Mod for its Moto Z Android smartphones that allows users to instantly print their captured photos.
Cannot rate Work In Progress Mods, and Mods can only be rated once they have been downloaded
Motorola will also be offering customisable back covers for the Moto Z, for those who aren't interested in the Moto Mods. The Moto Z, however, has a unibody metal design, which is identical to what we've seen through various leaks till now.