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Thread: Want to know about P/E (price-to-earnings ratio) ratio

  1. #1
    Join Date
    Mar 2010
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    221

    Want to know about P/E (price-to-earnings ratio) ratio

    I am a Management student and my teacher gave me a project "P/E (price-to-earnings ratio) ratio". I have to give presentation on this topic but i don't have an idea about this topic. I try to collect the information. If there is a someone who know about this topic then please reply me as soon as possible.

  2. #2
    Join Date
    Apr 2008
    Posts
    384

    Re: Want to know about P/E (price-to-earnings ratio) ratio

    P/E ratio (price-to-earnings ratio) of a stock (also called its "P/E", or simply "multiple") is a calculate of the price paid for a share relative to the annual net income or income earned by the firm per share. Unlike EV/EBITDA multiple, P/E reflect the resources arrangement of the company in question. P/E is a economic ratio used for evaluation. A higher P/E ratio means those shareholders are paying more for every unit of net income. So the stock is more expensive measure up to one with lower P/E ratio.

  3. #3
    Join Date
    Aug 2008
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    423

    Re: Want to know about P/E (price-to-earnings ratio) ratio

    A valuation ratio of a company's current share price compared to its per-share earnings. P/E Ratio is calculated as Market value per share / Earning per share (ERS). High P/E proposes that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. However, the P/E ratio doesn't inform us the entire story by itself. It's usually more useful to compare the P/E ratios of one company to other companies in the same industry, to the market in general or against the company's own historical P/E.

  4. #4
    Join Date
    Aug 2008
    Posts
    452

    Re: Want to know about P/E (price-to-earnings ratio) ratio

    The P/E ratio is the current stock price of a company divided by its earnings per share (EPS). A stock's P/E let know us how much investors are agreeable to pay per dollar of earnings. An improved understanding of the P/E ratio is to see it as a reflection of the market's hopefulness regarding a firm's growth prospects. The P/E ratio is a great deal improved indicator of a stock's value than the market price only. P/E ratios are normally lower throughout period of high price rises. There are a lot of explanations as to why a company has a low P/E.

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