Hello, in this article we will discuss the Price to Earnings ratio, PE ratio, PE Ratio is most commonly used in the valuation of companies’ share price as to whether Companies Share Price is undervalued or overvalued.
What is PE Ratio
PE Ratio is arrived at by dividing companies Market Price by Earning Per Share.
PE Ratio = Market Price of Stock /Earning Per Share
i.e Market Price of Stock is Rs. 70, Earning Per Share = Rs. 8 per share
PE Ratio will be = 70/8 = 8.75
This means that Companies stock is currently trading at 8.75 times of Current share price.
In the current market scenario, it is seen that companies growing at High Growth rates are seen with High PE.
PE ratio is also known as earnings multiple or price multiple.
How to find Companies Price to Earnings Ratio
Finding Companies PE Ratio is much simpler as a lot is Online Tools are available to track financial Data for listed entities. one such online Tool is Tickertape.
From the Above Price Quote of Reliance Industries Limited, you can See Companies PE. at the Time of Writing this post RIL PE is at 33.89 , which means that RIL stock is trading at 33.89 times its Earnings.