price-earnings ratio


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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 ?
The Articulation of Price-Earnings Ratios and Market-to-Book Ratios and the Evaluation of Growth, Journal of Accounting Research, 34, 235-259.
Independent variables are metric--beta and price-earnings ratio. They are cross sectional type taken at the beginning of the crash period i.e.
In such cases, the price-earnings ratio rises to infinity.
Investors and stock analysts have long used price-earnings ratios, usually called P/E ratios, to help determine if individual stocks are reasonably priced.(1) More recently, some economists have argued that the average price-earnings ratio for a stock market index such as the S&P 500 can help predict long-term changes in that index.
The price-earnings ratio is also related to the anticipated growth in the earnings of the company.
On the valuation ceiling - according to Bloomberg's data, - the one-year forward price-earnings ratio of the MSCI World Index on January 1 was 16.18x.
Facebook's price-earnings ratio is a hefty 117, especially because the company reported a big second-quarter loss.
BP shares trade on a price-earnings ratio of 6.5 times, while Shell trades at 8.9 times, partly reflecting the fact BP's actual earnings could be far lower if it was found to have been grossly negligent in causing the oil spill which would boost legal costs and fines.
With an average price-earnings ratio of six, Ghalibaf Asl said Iranian stocks are attractive to investors inside and outside the country -- even if Iran faces major geopolitical uncertainties and the constant risk of more sanctions.
Asia Cement posted US$0.08 in after-tax earnings per share last year, with chairman Douglas Hsu saying investing in the firm is promising with 10-time price-earnings ratio.
The same definition of total return may also be represented as the product of three factors: growth in yearly earnings per share, EPS; growth in the price-earnings ratio, PE (the end-of-the-year price P divided by EPS); plus the effect of reinvesting dividends:
Our price-earnings ratio is still in the top 10 among banking companies, so we are as competitive as anybody else.