Price to Earnings (Pe) Ratio

Definition of Price to earnings (PE) ratio:

1. Most common measure of how highly a firms share is valued, it shows the premium the stockmarket puts on the stock of fast growth firms as compared with stock of those with sluggish growth-record. Formula: Market price of each share ÷ Earnings per share (EPS).

How to use Price to earnings (PE) ratio in a sentence?

1. If you want to be able to maximize your profits you need to set as good of a price to earnings ratio as you can.
2. When you are deciding whether to continue making a product one of the most important things is the price to earnings ratio.
3. Our price to earnings ratio was a bit off and it did not make any sense to me, so I decided to just leave for the day.