| Price-Earnings Ratio - P/E Ratio | |
 A valuation ratio of a company's current share price compared to its per-share earnings. Calculated as:  |
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 EPS is usually from the last four quarters (trailing P/E), but sometimes can be taken from the estimates of earnings expected in the next four quarters (projected or forward P/E). A third variation is the sum of the last two actual quarters and the estimates of the next two quarters. Sometimes the P/E is referred to as the "multiple," because it shows how much investors are willing to pay per dollar of earnings. In general, a high P/E means high projected earnings in the future. However, the P/E ratio actually doesn't tell us a whole lot by itself. It's usually only useful to compare the P/E ratios of companies in the same industry, or to the market in general, or against the company's own historical P/E. |
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 Understanding the P/E Ratio - Learn what the price/earnings ratio really means and how you should use it to value companies. Move Over P/E, Make Way For The PEG - Has the P/E ratio lost its luster? The PEG ratio has many advantages over its well-known counterpart. Five Investing Pitfalls To Avoid, According to Investor's Business Daily - Common sense or common folly? Discover some approaches to circumventing typical stumbling blocks on the road to profitable investing. |
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