Stock price ratio. Here are ten financial ratios that can tell you most of what you need to know when you're scouring the market for good stocks to buy. Price-Earnings Ratio (P/E): This number tells you how many years worth of profits you're paying for a stock and you calculate it by dividing the stock price by earnings per.

Stock price ratio

What is P/E Ratio

Stock price ratio. Price to earnings ratio, based on trailing twelve month “as reported” earnings. Current PE is estimated from latest reported earnings and current market price. Source: Robert Shiller and his book Irrational Exuberance for historic S&P PE Ratio.

Stock price ratio


The ratio is used in valuing companies. The definitions may not be standardized. But the PER does not in itself indicate whether the share is a bargain. A company with a low PER indicates that the market perceives it as higher risk or lower growth or both as compared to a company with a higher PER.

If the investor feels that his perception is superior to that of the market, he can make the decision to buy or sell accordingly. For example, when U. Business Cycle Expansions and Contractions. It has declined to a more sustainable region of Its decline in recent years has been due to higher earnings growth. They are usually paid in company stock or options on their company's stock a form of payment that is supposed to align the interests of management with the interests of other stock holders.

The stock price can increase in one of two ways: This can influence business decisions in several ways:. From Wikipedia, the free encyclopedia. Cyclically adjusted price-to-earnings ratio Fundamental analysis List of finance topics Stock market Stock market bubble Stock market crash Stock valuation Value investing Valuation using multiples. Irrational Exuberance 2d ed.

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This page was last edited on 23 November , at By using this site, you agree to the Terms of Use and Privacy Policy. July — March contraction. Bottom Black Monday was 19 Oct


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