price-earnings ratio

[ prahys-ur-ningz rey-shoh, -shee-oh ]

noun

1. the current price of a share of common stock divided by earnings per share over a 12-month period, often used in stock evaluation. : P/E, p/e, PE, P-E, p-e

price-earnings ratio

noun

1. the ratio of the price of a share on a stock exchange to the earnings per share, used as a measure of a company's future profitability P/E ratio

Word History and Origins

Origin of price-earnings ratio¹

First recorded in 1960–65

Example Sentences

In Mark’s case, for example, plenty of investors believe the brand-name stock he is preparing to sell is a better bargain now than it was when he bought it in 2021, because the decline in price has brought down its price-earnings ratio.

From Seattle Times

Goldman Sachs said in a note a recession could cause the S&P 500 index to fall by 19% to 3,150 by the end of 2022, and a sharp contraction in the price-earnings ratio.

From Reuters

Analysts and professional investors look at something called the price-earnings ratio to gauge investors’ willingness to own stocks.

From Seattle Times

By comparison, Google’s parent, Alphabet, boasts a price-earnings ratio of 21, with Amazon at 38.

From Washington Post

Some fund managers have also become worried over the comparatively high valuations commanded by growth stocks, which have helped boost the S&P’s price-earnings ratio near its highest level since the 2001 dotcom bubble.

From Reuters