Price-to-Earnings (P/E)

Andre Tester Market-based ratios Also available:

Price-to-Earnings (P/E)

Market Capitalization / Net Income or Price per Share / Earnings per Share (EPS)

Definition:

Measures how much investors are willing to pay for each dollar of net earnings.

Interpretation:

High P/E → High growth expectations or overvaluation

Low P/E → Low growth, distress, or undervaluation

📌 Sensitive to "Interest expense" "Tax structure" and "Financial leverage"