How to understand PE Ratio: Key insights for investors

Stock Analysis

The Price-to-Earnings (PE) ratio is a financial metric that compares a company’s current share price to its earnings per share (EPS). It helps investors assess whether a stock is overvalued or undervalued relative to its earnings. A high PE ratio may indicate growth expectations, while a low PE ratio could suggest a bargain or potential issues. However, it’s important to use the PE ratio alongside other metrics for a comprehensive analysis of a stock’s value.