PE ratio
Earnings-based valuation metric
PE ratio, short for price-to-earnings ratio, is a measure of a stock's price relative to its earnings per share.
Investors use it to gauge whether a stock is overvalued or undervalued: The company trades at a PE ratio of 25.
A high PE suggests investors expect future growth; a low PE may signal undervaluation or declining prospects.
Also written P/E ratio.
Consisting of many parts
- intrinsic valueWorth independent of circumstance
- fair valueReasonable exchange price
- overvaluedRated beyond actual worth
- undervaluedRated below true worth
Company profit per share
- net incomeProfit after all deductions
- profitGain exceeding expenditure
- operating incomeEarnings from core operations
- bottom lineEssential point or conclusion
Major stock market index
- Dow JonesStock market benchmark
- bull marketPeriod of rising prices
- bear marketProlonged securities decline
- market capTotal equity value
market sentiment · index · blue-chip · growth stock · value stock · cyclical · defensive
Mathematical business performance representation
- due diligencePre-transaction reasonable care
- stock pickingChoosing specific shares to purchase
- benchmarkingMeasuring against top performers
- peer comparisonEvaluation against similar others
multiple
Consisting of many parts
- intrinsic valueWorth independent of circumstance
- fair valueReasonable exchange price
- overvaluedRated beyond actual worth
EPS
Company profit per share
- net incomeProfit after all deductions
- profitGain exceeding expenditure
- operating incomeEarnings from core operations
S&P 500
Major stock market index
- Dow JonesStock market benchmark
- bull marketPeriod of rising prices
- bear marketProlonged securities decline
market cap · market sentiment · index · blue-chip · growth stock · value stock · cyclical · defensive
financial modeling
Mathematical business performance representation
- due diligencePre-transaction reasonable care
- stock pickingChoosing specific shares to purchase
- benchmarkingMeasuring against top performers