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PE ratio

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PE ratio

Measurement of a share's performance in the market. The price-earnings ratio is calculated by dividing the current share price by the earnings per share (EPS). The ratio is expressed as a number referred to as a ‘multiple’. The figure shows how many years it would take the company to earn an amount equal to its share value. A share on a high multiple suggests that a company is growing rapidly, meaning that future earnings have been factored in to the share price. A low PE multiple suggests that the company has sluggish growth. The price-earnings ratio is a key indicator for analysts and investors determining whether a share is overvalued, fairly priced, or cheap.
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And unless we start to see some improvements in the real economy, rather than just a lot of liquidity pumping and deficit spending to get the economy moving, the markets are going to tank to bring the PE ratios back in line from a current PE ratio of 144 to something more normal in the 10 times to 20 times range.
Economy headed for double-dip recession by Jay Taylor, goldinvestor.com / Stockhouse
As the fall played out, the PE ratio initially fell, due to investors attaching a higher risk label to equities, because the cloudiness of the economic outlook made the value of forecast earnings less reliable.
Markets look for signs of growth by Daily Post (Liverpool, England)
The change in PE ratios is nothing but a change in psychological behaviour, says Parikh.
The cost of conduct by Money Today (New Delhi, India)
 
 
 
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