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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 Sclerosis (MS) is a progressive disabling disease which affects mostly young adults of ages between 20 and 40 years, causing substantial disability and low quality of life.6 Mean age of onset of MS in Pakistan is reported to be 27 years, with a female to male ratio of 1.45:1.5.
Based on the usage, the global multiple reaction monitoring assay market is divided into following:
In eight of the 15 countries, men living in urban areas had elevated odds of having had multiple sex partners (odds ratios, 1.6-4.3).
These considerations suggest three changes in law and practice to reduce multiple births from IVF.
"Clean data is so important, and that's why you need multiple strategies for making sure that what you put in is accurate," she points out.
3, small private companies (with similar growth potential within the same markets) trade at lower multiples (25 percent to 50 percent is common) of that of large publicly traded companies.
They also unveiled the first evidence for multiple excitons from another type of quantum dot, made of lead sulfide.
A specialized cash flow performance solution that ties together transactional data from multiple systems with a forecast simulation engine can offer corporations this insight into future cash flows.
The mean gestational age at birth was 28 weeks in both groups; the mean birth weight was 1,039 g in the multiple group and 1,035 g among singletons.
Suppliers typically have to complete multiple tasks to meet safety requirements--particularly when going to multiple sites.
I always began my assemblies by explaining the words multiple sclerosis.

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