Fundamental Analysis - Technical Analysis from A to Z
The P/E ratio (i.e., Price/Earnings ratio) is a price ratio calculated by dividing the security's current stock
price by the previous four quarter's earnings per share (EPS).
The P/E ratio shows how much an investor must pay to "buy" $1 of the company's earnings.
Of course, investor expectations of a company's future performance play a heavy role in determining
a company's current P/E ratio.