What is PE (Price to Earning Ratio) in Stock Market? In the telecommunications sector, the actual price-to-earnings (P/E) ratio for 2017 10.61, while the forward P/E for 2018 is 13.62.

Price-to-earnings ratio = stock price / earnings per share.

Price-Earnings Ratio - P/E Ratio: The price-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings. The market value of XY Limited is, therefore, under valued by $20.

If the P/E ratio of similar companies is $4, the market value of a share of XY Limited should have been $40 ($4 × $10), thus the share is over valued by $20. It means the market value of a share of XY Limited should be $80 (i.e., 8 × $10). The price earnings ratio of similar companies in the same industry is 8.

The price to earnings ratio (PE ratio) is a ratio used for valuing a company.

It measures the current share price to its earnings-per-share (EPS).

(Beginner’s Guide): Yes, you read the title correct! The price-to-earnings ratio or P/E is one of the most widely-used stock analysis tools used by investors and analysts to determine a stock's valuation. The Price Earnings Ratio (P/E Ratio) is the relationship between a company’s stock price and earnings per share (EPS) Earnings Per Share Formula (EPS) EPS is a financial ratio, which divides net earnings available to common shareholders by the average outstanding shares over a certain period of time. Many of the individual’s that have been the participants of the stock market, majorly don’t know the appropriate use of Price-to-earnings ratio and its definition.