Encyclopedia > PE Ratio

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PE Ratio

The PE ratio of a stock is:

 Price per Share
 ---------------
 Earnings Per Share

The price per share is the market price of a single share of the stock. The Earnings per share is Net Income divided by number of shares. The PE of a stock describes the price of a share relative to the earnings of the underlying asset. The higher the PE the more over valued the stock is.



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