Price-to-Earnings Ratio

Definition: A valuation ratio comparing a company's current share price to its per-share earnings. P/E = Market Price per Share ÷ Earnings per Share. Higher P/…

A valuation ratio comparing a company's current share price to its per-share earnings. P/E = Market Price per Share ÷ Earnings per Share. Higher P/E may indicate expected growth; lower P/E may indicate undervaluation.