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Investment Tips: What Is A P/E Ratio?
By qwcdirect | May 1, 2010
If you are a new investor in the stock market, you might have come across several terms that are confusing. In order to be successful in the stock market, you need to understand these terminologies and the basics on how the market operates. In addition, you have to gain in-depth knowledge on some of the technical terms such as P/E ratio, capitalization, EPS and several others.
The P/E ratio, which is basically the price per the earning ratio of a given stock, is actually how expensive the stock in question is. When the P/E ratio is high, it means that investors are willing to pay more in order to get the stock. This also means that the stock in question has higher expectation and the probability of it being bought is very high. When you are comparing the P/E ratios of different companies, you have to make sure that you are comparing companies that are in the same industry.
Topics: Finance, Stocks & Trading | No Comments »