• P/E Ration is short for Price to Earnings Ratio, also known as the Price to Earnings Multiple. The P/E Ratio is one of the Ratios that are commonly referred to as Common Stockholder Ratios, which are used by investers to make financial decisions about buying and selling stocks in a company. These include (among others) Return on Equity, Return on Capital, Price Per Share, and Earnings per Share. The P/E Ratio is obtained by dividing the Price per Share by the Earnings per Share. Earnings Per Share is determined by dividing the net earnings by the number of shares outstanding.
  • 6-10-2017 PE is simply the price of a stock divided by the earnings. It typically is about 8, but might go go up. When the entire market average PE goes above 30, that is considered a bubble. Bubbles break, so you don't buy such a stock.

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