P/E ratio
Also called Price-to-earnings ratio
Price-to-earnings: a share's price divided by the company's yearly earnings per share.
The P/E ratio is a share’s price divided by the company’s earnings per share for a year. It tells you how many rupees buyers are paying for each rupee of profit. A high P/E usually means people expect strong growth; a low one can mean they expect trouble. It’s a starting point for questions, not a buy or sell signal.
How it's calculated
P/E = share price / earnings per share
- Earnings per share = yearly profit / number of shares
Questions people ask
What is the P/E ratio?
The P/E, or price-to-earnings, ratio is a share's price divided by the company's earnings per share for a year. It tells you how many rupees you're paying for each rupee of yearly profit.
Is a low P/E good?
Not by itself. A low P/E can mean the market expects profits to fall or sees more risk. A high P/E can reflect expected growth or overexcitement. It's a starting question, best compared between similar companies.
What is a good P/E ratio?
There's no single good number. Normal P/E levels differ by industry, growth speed and risk, and they change over time. Compare a company with similar companies and with its own past, not with a fixed target.
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