What is a P/E ratio?
The P/E ratio compares a share's price with the company's profit per share.
A P/E of 20 means investors are paying 20 for each 1 of yearly profit. A high number can mean investors expect fast growth, or that the share is expensive. A low one can mean it is cheap, or that the business is in trouble. It is most useful for comparing similar companies.
Example
Stock market today
A share priced at 100 with earnings of 5 per share has a P/E of 20.
General information only, not financial advice. Investing can lose you money.