Valuation
What is P/E Ratio?
Share price divided by earnings per share over the last twelve months.
The P/E ratio tells you how many dollars investors pay for one dollar of a company's annual profit. A P/E of 20 means the market values the business at 20 years of its current earnings. High P/Es usually mean investors expect fast growth; low P/Es can mean a bargain, a slow business, or earnings about to fall. Compare P/Es within an industry — a bank and a software company are priced on very different norms. Flash Finance US computes P/E from the diluted EPS each company reported to the SEC over its last four quarters.