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WordNet-Online
Definitions from WordNet
Noun p/e ratio has 1 sense
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Definitions from the WebP/E RatioDescription:P/E Ratio, also known as Price-to-Earnings Ratio, is a financial metric used to analyze and compare the valuation of companies in the stock market. It measures the current market price of a company's stock relative to its earnings per share (EPS). The higher the P/E ratio, the more investors are willing to pay for each dollar of earnings. Senses and Usages:Sense 1: Valuation MetricAs a valuation metric, the P/E ratio helps investors determine whether a stock is overvalued or undervalued. Example Sentence: The P/E ratio of XYZ Company is 20, suggesting that investors are willing to pay 20 times the company's earnings for each share. Related Products: Stock Valuation Books Sense 2: Comparison ToolThe P/E ratio serves as a useful tool for comparing the value of different stocks within the same industry. Example Sentence: When selecting between two similar companies, investors often consider the P/E ratio to determine which stock is relatively cheaper. Related Products: Stock Market Analysis Books Sense 3: Growth ExpectationsA high P/E ratio indicates that investors have high growth expectations for a company, while a low P/E ratio implies lower growth expectations. Example Sentence: Companies in the technology sector often have high P/E ratios due to their expected future growth prospects. Related Products: Investment Growth Strategies | ||||
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