Understanding The Stock Market Details
The P/E ratio is the price to earnings ratio. Since stock prices vary,
as do the company's profits, it's difficult to compare two different
company's profitability unless you have a common factor. That's the P/E
ratio. The P/E ratio is most useful comparing two companies in the same
industry. To find the ratio, you divide the price per share by the
earnings per share. The bigger the number the more overpriced the stock
is. Investors use this information in one of two ways. They buy a stock
with a high P/E because it implies that people expect the stock price to
grow dramatically. Or, they bypass the stock in favor of an undervalued
stock with a low P/E, believing that company is stronger and
overlooked. Selecting companies with a low P/E is less risky than
purchasing those with a higher P/E.
Understanding The Stock Market
Understanding The Stock Market
Understanding The Stock Market
Understanding The Stock Market
Understanding The Stock Market
Understanding The Stock Market
Understanding The Stock Market
Understanding The Stock Market
Understanding The Stock Market
Understanding The Stock Market
Understanding The Stock Market
Understanding The Stock Market
Understanding The Stock Market
Understanding The Stock Market
Understanding The Stock Market
Understanding The Stock Market
Understanding The Stock Market
Understanding The Stock Market
Understanding The Stock Market
Understanding The Stock Market
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