Price ÷ earnings per share: how many years of current profit the market pays for the stock. High P/E prices in future growth; negative earnings make it meaningless.
How to read it
Compare within the SAME sector: 12 can be expensive for a bank and 25 cheap for software. Against the stock's own 5-year average is the other honest comparison.
Limits
Meaningless with negative earnings; distorted by one-off gains and cycles (a cyclical looks cheapest at the peak).
Example
P/E 30 = the market pays 30 years of today's profit — it expects that profit to grow.
Related terms
See it on a ScorecardAll terms
Definitions describe how Easy Sahm computes and reads each figure. Analysis, not financial advice.