What is the P/E ratio? 📊
👉 The price-to-earnings ratio (P/E) is one of the most widely used metrics for investors and analysts to determine stock valuation. It shows whether a company's stock price is overvalued or undervalued and can reveal how a stock's valuation compares to its industry group or a benchmark like the S&P 500 index.
🧮 To calculate the Price-to-Earnings (P/E) ratio of a company, you need two pieces of information: the current stock price and the earnings per share (EPS).
Example: We know that Apple company's EPS in 2023 was $6.43 and the current stock price is $189.30, which means we need to calculate this: 189.30/6.43 = 29,44. This is Apple's P/E ratio.
