P/E ratio can generally be seen in stock trading software. Enter the stock interface in the stock trading software, and then enter the company profile, you can see the price-earnings ratio. It does not mean that the lower the P/E ratio, the better, and the greater the investment value. This is because there will be some differences in the P/E ratio of different industries, which cannot be generalized.

1. What is the price-earnings ratio?

We usually understand the price-earnings ratio as the ratio of the stock market price divided by the earnings per share, which clearly reflects the time required for the whole process from investment to cost recovery. So the P/E ratio is one of the criteria for us to evaluate whether the stock purchase is reasonable. The P/E ratio calculated with different data has different meanings. The current P/E ratio is calculated from the earnings per share in the past four quarters, and the predicted P/E ratio can be calculated from the earnings in the past four quarters, or from the sum of the actual earnings in the first two quarters and the predicted earnings in the last two quarters.

2. Where is the P/E ratio?

If investors want to see the price-earnings ratio of a company when it goes public, it is a bit difficult. Business index changes with the change of stock price every day, so it can't be found directly and intuitively. In addition, in the stock software, we can only see the spot P/E ratio. If you want to continue the calculation through the closing price, investors can directly enter the stock market software to check the K-line, and earnings per share can check the current statement.

3. How to choose stocks with P/E ratio

When the P/E ratio is less than 0, the profits of listed companies are negative. When the price-earnings ratio is between 0 and 20, the value of listed companies is undervalued. When the P/E ratio is 20-30, listed companies are at a normal level. When the price-earnings ratio exceeds 30, the value of listed companies is overvalued and the stock price bubbles, but the price-earnings ratio is only one of many indicators of stock investment, and the price-earnings ratio can only roughly estimate the investment value of stocks.

If you want to trade stocks, you can carefully study the price-earnings ratio, but the price-earnings ratio is only one of the indicators to evaluate the value of stocks, and you need to combine other indicators to trade stocks. Investment is risky, so be cautious.