The Price to Earnings (P/E) ratio is a widely used metric to evaluate the valuation of a company’s shares. It is calculated by dividing the market value per share by the earnings per share (EPS). A high P/E ratio could mean that a company’s stock is over-valued, or investors are expecting high growth rates in the future. Conversely, a low P/E ratio might indicate that the company is undervalued or that investors expect future downturns. This ratio is used by investors and analysts to compare the relative value of companies in the same industry or sector.
« Back to Glossary Index
About the author
Jenna Lofton, an expert in stock trading, investing, and financial planning, combines over a decade of experience with rigorous academic training. Holding dual MBAs in Finance and Business Administration from the University of Maryland, Jenna's expertise is grounded in a deep understanding of the financial markets. Her career, which started on Wall Street, has evolved into empowering others through her insights and analyses in the dynamic world of finance.
Based in New York City, Jenna's approach is informed by her hands-on experience as a former financial advisor and her keen observation of market trends. She is known for translating complex financial concepts into actionable strategies, making her a valuable resource for both seasoned investors and newcomers to the stock market. Her commitment to financial literacy and her ability to demystify investment principles have made her a respected and authoritative voice in the investment community.