Price-Earnings Relative

AAA

DEFINITION of 'Price-Earnings Relative'

A price-earnings ratio of a stock divided by the price-earnings ratio of a market measure, or index, such as the S&P 500 or Wilshire 5000.

INVESTOPEDIA EXPLAINS 'Price-Earnings Relative'

This is a method for judging whether a price-earnings ratio is reasonable in relation to market conditions and historical P/Es.

RELATED TERMS
  1. Relative Value

    A method of determining an asset's value that takes into account ...
  2. Price-Earnings Ratio - P/E Ratio

    A valuation ratio of a company's current share price compared ...
  3. Standard & Poor's 500 Index - S&P ...

    An index of 500 stocks chosen for market size, liquidity and ...
  4. Wilshire 5000 Total Market Index ...

    A market capitalization-weighted index composed of more than ...
  5. P/E 10 Ratio

    A valuation measure, generally applied to broad equity indices, ...
  6. Abnormal Earnings Valuation Model

    A method for determining a company's worth that is based on book ...
RELATED FAQS
  1. How can EV/EBITDA be used in conjunction with the P/E ratio?

    Because they provide different perspectives of analysis, the EV/EBITDA multiple and the P/E ratio can be used together to ... Read Full Answer >>
  2. What is the average price-to-earnings ratio in the retail sector?

    According to NYU's Stern School of Business, as of January 2015, using trailing 12-month data, the average price-to-earnings ... Read Full Answer >>
  3. What metrics are commonly used to evaluate companies in the retail sector?

    Some of the most commonly used metrics to evaluate companies in the retail sector include the price/earnings to growth (PEG) ... Read Full Answer >>
  4. What is the average price-to-earnings ratio in the food and beverage sector?

    The food and beverage sector includes diverse groups of companies specializing in producing different foods and beverages ... Read Full Answer >>
  5. What is the average price-to-earnings ratio in the automotive sector?

    As of January 2015, the current price-to-earnings, or P/E, ratio was 15 for auto manufacturers and 20 for auto parts manufacturers. ... Read Full Answer >>
  6. What is the formula for calculating the price-to-earnings (P/E) ratio in Excel?

    The price-to-earnings ratio, or P/E ratio, is a valuation ratio used in fundamental analysis. The ratio compares a company's ... Read Full Answer >>
Related Articles
  1. Fundamental Analysis

    Ratio Analysis Tutorial

    If you don't know how to evaluate a company's present performance and its possible future performance, you need to learn how to analyze ratios.
  2. Forex Education

    How To Use The P/E Ratio And PEG To Tell A Stock's Future

    While the price-to-earnings ratio is commonly used for assessing stock prices, the price/earnings-to-growth ratio offers forecasting advantages that investors need to know.
  3. Budgeting

    The P/E Ratio: A Good Market-Timing Indicator

    Check out the returns this newer technical analysis tool would've yielded over the period from 1920 to 2003.
  4. Markets

    Understanding The P/E Ratio

    Learn what the price/earnings ratio really means and how you should use it to value companies.
  5. Stock Analysis

    Who's The Stronger Stock: Amazon or eBay?

    Learn how revenue, profitability, valuation metrics, active user base and seller ratings measure the success of Amazon and eBay.
  6. Investing

    What More Volatility Means For Momentum Stocks

    One byproduct of the recent tick higher in bond yields: a meaningful rise in volatility for both stocks and bonds.
  7. Fundamental Analysis

    Key Financial Ratios for Pharma Stock Investing

    Analysts simplify the business of investing in pharma by studying key financial ratios and metrics. Know these metrics before you buy or sell pharma.
  8. Stock Analysis

    Who Are Netflix's Main Competitors?

    Netflix has many competitors, but is that really what current and potential shareholders should be worried about?
  9. Personal Finance

    Is Amazon Overvalued? Compare Price-To-Sales Ratios

    The price-to-earnings (P/E) ratio is the most common and easiest valuation metric to calculate. But what happens when earnings are negative?
  10. Investing

    Too Late To Invest In EM?

    Investors have flocked to developing markets amid continued low U.S. interest rates & hopes of further economic stimulus from emerging world central banks.

You May Also Like

Hot Definitions
  1. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  2. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  3. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  4. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  5. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  6. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!