The P/E Might Well Prove Mightier than the Pessimism
The price earnings ratio, known as the p/e ratio for short, is a useful way to evaluate the attractiveness of a company's stock price compared to its current earnings per share. If a company is reporting earnings per share of $2, and the stock is selling for $20 per share, the p/e ratio is 10. “One potential way to know when a sector or industry is overpriced is when the average p/e ratio of all of the companies in that [...]