Price-to-Earnings Ratio (P/E Ratio)

The price-to-earnings ratio (P/E ratio or PER) is the ratio of a company’s share price to its per-share earnings. It is used to assess the relative value of a company’s shares and determine whether the share price is overvalued or undervalued. The P/E ratio can also be employed to compare a company’s current value with its historical value or to compare different markets over a specific timeframe. Fundamental analysts rely on the P/E ratio as a key tool to determine an asset’s intrinsic value.