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What it does: Calculates the relationship between the market price of a stock and its earnings per share (EPS).
How it works: It divides the price per share by the earnings per share, showing how many times investors are willing to pay for the company's earnings.
Calculation: Divide the market price of the stock by the earnings per share.
Usage: Fundamental for evaluating the profitability and valuation of a stock.
Formula: P/E = Share Price / Earnings per Share (EPS)
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