P/E Ratio = “Price to Earnings Ratio” 📝
So, that’s a company’s stock price vs. profits/share 🤑
💡Remember: EPS = company’s profits per every share!
You can find the P/E Ratio right on Bloom, under each stock page 🔍
Just scroll to the “Stats Section” of your favorite stock 🙈
What do the numbers even mean though? ➡️
High P/E Ratio = each share costs more than it profits 🥴
📝 $100 price vs. $50 profit/share 🏦
Low P/E Ratio = each share is making more money than its price 🤑
📝$50 price vs. $100 profit/share
Negative P/E Ratio = the company is losing money for every share! 😨
Companies with a negative P/E ratio can be incredibly risky 🚨
📝 $150 price vs. -$100 profit/share!
Different industries have different average P/E Ratios 📊
So, you should always compare your stock to similar stocks in the industry!
Now you know that P/E ratio can mean. . .
🟢 Low P/E Ratio = possibly undervalued
🟡 High P/E Ratio = possibly overvalued
🔴Negative P/E Ratio = losing money, risky
It's important to remember that the P/E ratio is just one factor to consider💡
But, now you have a ratio for determining the value of a stock 🚀
