Understanding P/E ratios
What investors pay for each dollar of earnings.
5 min · Beginner · Lesson 5 of 10
Step 1 of 5
The formula
The price-to-earnings ratio (P/E) is the share price divided by earnings per share. A $100 stock with $5 of yearly EPS has a P/E of 20: investors pay $20 for each $1 of yearly earnings.
For entertainment and education, not investment advice.