The price-to-earnings ratio (P/E) is the share price divided by the earnings per share. A P/E of 15 means the price is fifteen times one year's profit per share.
People use it to compare how the market prices different companies. Ratios differ a great deal between sectors, so comparisons usually make sense only within one.
A high P/E is not “expensive” and a low one is not “cheap” in any simple sense: both reflect expectations, and a company with no profit has no meaningful P/E at all.
Written by NUSANTARA as a general introduction. It explains a term; it is not advice about any security.
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