Introduction to P/E Ratio or Price-to-Earnings Ratio
The PE ratio measures current share price versus its per-share earnings. It's also called the price multiple or the earnings multiple.
Formula
"PE Ratio" will be the trailing twelve months of earnings. We also apprehend PE Ratio (Quarterly) and PE Ratio (Annual) from a company's financial statements.
Price to Earnings Ratio = Price / Earnings Per Share (EPS)
To determine P/E value, one must divide the current stock price by the earnings per share (EPS). The current stock price can be gathered by plugging a stock's ticker symbol into a finance website. Although this substantial value shows what investors must currently pay for a stock, the EPS is a slightly more obscure figure.
EPS comes in two forms. The first is a metric listed in the fundamentals section of most finance sites, with the notation "P/E (TTM)," where "TTM" is a Wall Street acronym for "trailing 12 months." This number signals the company's performance over the past 12 months. The second type of EPS is found in a company's earnings release, which often provides EPS guidance.
