Price-earnings ratio (P/E or PER), also known as "cost-earnings ratio", "stock price-earnings ratio" or "market price-earnings ratio". P/E ratio refers to the ratio of stock price divided by EPS. Or divide the company's market value by the annual profit attributable to shareholders.
P/E ratio is the ratio of share price to earnings per share. The price-earnings ratio widely discussed in the market usually refers to the static price-earnings ratio, which is usually used as an indicator to compare whether stocks with different prices are overvalued or undervalued. It is not always accurate to measure the texture of a company's stock with price-earnings ratio. It is generally believed that if the price-earnings ratio of a company's stock is too high, then the price of the stock is in a bubble and its value is overvalued. When a company grows rapidly and its future performance is promising, when comparing the investment value of different stocks with P/E ratio, these stocks must belong to the same industry, because the company's earnings per share are close and the comparison is effective.