Stock Markets Exposed
what does it mean when someone says a stock is trading XXX times its earnings?
Does this mean the P/E. Would a stock trading at 10 times its earnings have a P/E of 10?
Public Comments
- Yes. You answered your own question.
- Yup that's the price/earnings ratio. You'll hear people talk quite a bit about the multiple the stock is trading it and that's the P/E ratio which is what you're talking about. If a stock has a price of $10 and is earning $1/share, then 10/1=10 which is your PE multiple.
- P/E of 10 means it will take you 10 years to get your money back. It is calculated by dividing the earnings per share by the price per share. Resources below that can help you get more info on stocks and understand important stock selection criteria...and trader's blog - find out what others are doing.
