11 Oct 2018, 11:47 — 1 min read
Definition: The Price-Earnings Ratio refers to a ratio of a stock price to company's earnings per share (EPS), This ratio is widely used to value companies, usually publicly traded companies.
Example: It is calculated by dividing the price of the stock by earning per share of the company. For example, if a stock is trading at $30 & its earnings per share for the year ended was $10, then Price-Earnings ratio will be 30/10 or 3.
Business Insight: It is widely used by analysts to predict stock prices based on the earnings forecasts.
Posted byGlobalLinker Staff
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