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What is P/E Ratio? easy explain

hey guys welcome to another Articles of basic investment terms today we're  going to be taking a look at the p/e ratio now the p/e ratio is by definition a price to earnings ratio so it is a measure.

What is P/E Ratio



Key-point

Price to earnings ratio, or P / E, is a way to value a company by comparing the price of its stock to its earnings.
The P / E equals the price of a share of stock divided by the expected earnings per share, It tells you how much you are paying for each dollar of earnings.

Low or high P / E ratios inherently good or bad.

When a P / E ratio is low, it could mean that investors are losing confidence, selling shares
and driving the price down — while earnings hold steady.
The P / E could also be low if the expected earnings grow quickly — before investors notice
and start buying shares — driving the price up.
Alike, a high P / E could result if investor excitement drives the share price up while
earnings remain low.
OR — that high P / E may be justified if the company is poised for growth
Make sure you research companies carefully.
Compare the comparing P / E to others in its industry, and analyze any inconsistencies.
P / E is a complementary tool.

Use it with other factors and information when evaluating a critical stock price.

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