Price/Earnings Ratio (P/E)

The Price/Earnings (P/E) Ratio is a financial metric that compares a company's current stock price to its earnings per share (EPS). It indicates how much investors are willing to pay for each dollar of the company's earnings. A higher P/E suggests higher expectations for future growth, while a lower P/E may imply the stock is undervalued or expectations are lower. Investors use the P/E ratio to assess whether a stock is reasonably priced compared to its earnings and to compare it with other companies in the same industry.