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Learn what the P\\/E ratio means, how to calculate it, and how to use forward, trailing, and PEG ratios to judge if a stock is under- or overvalued. Define P/E Ratio in Simple Terms P/E ratio , or the Price-to-Earnings ratio , is a metric measuring the price of a stock relative to its earnings per share (EPS). The P/E ratio is derived by taking the price of a share over its estimated earnings. As such, a higher value generally indicates a greater cost for a lower return, and a lower value generally indicates a greater return for a lower cost. Learn what P/E Ratio means, how to interpret high or low P/E, and use it for smart investment analysis. Includes examples like TCS, Infosys & Zomato. P/E Ratio P/E Ratio Meaning The price-earnings ratio , often called the P/E ratio is a market value ratio of a company’s stock price to the company’s earnings per share. It is a market prospect ratio that is useful in valuing companies.
