price-to-earnings ratio

Investment Dictionary -> price-to-earnings ratio

The Price-to-Earnings Ratio is a measure frequently used to compare different stocks. The Price-to-Earnings Ratio allows for comparison between stocks selling at different prices. The Price-to-Earnings Ratio is calculated by dividing the price of one company’s share by the earnings per share for a 12 month period. Price-to-Earnings ratio is often shortened to P/E.