B

Glossary

Price-to-Earnings Ratio

Also: P/E

Important — standard screening

What it measures

How much investors pay per $1 of earnings. Elevated = expensive or high growth expected.

Formula

Market Cap / Net Income

Benchmark

S&P 500 avg ~22x

Related metrics

Fwd P/EPEG RatioEarnings YieldEV/EBITDA

Source

Damodaran, Investment Valuation (2012), ch. 18

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