Investing 101: How to Choose What Company to Invest In
Friends That Invest
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What Is Price to Earnings Ratio?
Price to earnings ratio is a common metric that people use to value stocks. It really just tells you if a company is over or undervalued in the market. The calculation for this one here, price per share divided by earnings per share. And that number gives you a multiple. For example of p ratio: A stock trading at 20 dollars per share, worth earnings of two dollars per share. Has a p ratio of ten, meaning that you'll make your money back in ten years, if nothing about the situation the company changes.
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