Cluenex
Log inStart free
Glossary · Valuation

P/E ratio

Share price divided by the last 12 months of earnings per share.

Why it matters

How many dollars you pay for one dollar of yearly profit. High P/E means the market expects growth; low P/E can mean a bargain or a business in trouble.

How to read it

Compare with peers and the company’s own history. P/E is meaningless when earnings are tiny or negative.

Also called: price to earnings

Related

Earnings per shareNet profit divided by the number of shares.P/S ratioMarket cap divided by the last 12 months of sales.Fair valueOur estimate of what one share is worth, based on the cash the business can produce.

In the Cluenex app, this explanation opens next to every p/e ratio figure, with the live reading for the stock you are looking at. Open it in Cluenex