You are using an older browser version. Please use a supported version for the best MSN experience.

P/E Ratio - TST's Word of the Day Explained

Let's talk P/E ratio, shall we? What does P/E stand for? It's price-to-earnings (ratio). Think of it like this--it's basically a way for investors to gauge if a company's earnings actually stack up to its share price. How do you calculate P/E ratio? To find a stocks P/E ratio- it's easy. All you have to do is divide the stock's market value per share (or stock price) by the company's earnings per share. TheStreet's Dave Butler digs into trailing and forward P/E ratios and more. Read What Is a P/E Ratio and Why Is it Important? How does a company establish its P/E ratio and typical yield? According to Real Money's Mark Dodosh, "that's a function of the market. If you have years of good data it's easy to look back and see where any particular stock has traded in the past." He says P/E ratios reflect a stock's popularity as well as its ever-changing fundamentals. Read his take here: Barron's Is Dead Wrong About Death of Reversion to the Mean Can You Name the Companies Behind These Clever Stock Tickers?

UP NEXT

UP NEXT

Recent Videos

Featured Partners

image beaconimage beaconimage beacon