➗Beginner
What Is the P/E Ratio?
How much you pay for each dollar of profit
The Price-to-Earnings (P/E) ratio = share price ÷ earnings per share. A P/E of 25 means you're paying $25 for every $1 the company earns annually. High P/E often means investors expect strong growth. Low P/E may mean the stock is cheap — or that growth is slowing.
Quick check
A stock trades at $100 and earns $5 per share. What is its P/E ratio?