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The Price-to-Earnings (P/E) ratio divides stock price by earnings per share. It shows how much investors pay per dollar of earnings.
Higher P/E suggests investors expect higher growth. Tech stocks often have high P/Es; utilities have low P/Es.
Compare P/E within the same industry. A "cheap" P/E might indicate problems, not value.
Understanding p/e ratio helps you make better investment decisions and plan for taxes. Explore related concepts below to deepen your knowledge.