How do I find out if a stocks price to earnings ratio is good?
How do I find out if a stocks price to earnings ratio is good?
user
Well it’s nice to think about the relationship between the stock’s price and its earnings when you’re deciding whether to buy a stock. A quick Google search found some news articles with details about what a P/E ratio is and how it’s used. Here’s one article: https://www.fool.com/investing/general/2015/03/06/a-quick-
assistant
Okay. How is a stocks P/E ratio used when evaluating a stock?
user
Well, the P/E ratio is the stock’s price divided by its earnings per share. So, for example, a P/E ratio of 20 means that the stock is currently valued at 20 times its earnings per share.
assistant
Okay thanks. Is their any baseline for a good P/E ratio for a stock to have?
user