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Price-to-earnings ratio (P/E)

Definition

A valuation measure comparing a company's share price with its earnings per share. It shows how much investors pay for each dollar of profit.

Formula

P/E = Share price ÷ Earnings per share (EPS)

Example

A stock at $80 with $4 of earnings per share has a P/E of 20.

General educational information, not personal financial advice. See our disclaimer.

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