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 I tell whether a particular small cap stock has a positive investment outlook?

    The investment outlook for a small-cap stock is determined by operational outlook and current stock price. The operational ... Read Full Answer >>
  2. What is the average price-to-earnings ratio in the Internet sector?

    The average price to earnings varies significantly within the Internet sector but, as of 2015, the current industry average ... Read Full Answer >>
  3. Why is the price to sales ratio commonly used for comparing companies in the Internet ...

    The price to sales (P/S) ratio is used for comparing companies in the Internet sector because it is the most meaningful measure ... Read Full Answer >>
  4. Why would a company buyback its own shares?

    Stock buybacks refer to the repurchasing of shares of stock by the company that issued them. Essentially, a buyback occurs ... Read Full Answer >>
  5. Which financial statements are most important when performing ratio analysis?

    Financial ratio analysis is an important aspect of fundamental analysis for any party engaged in value investing. Financial ... Read Full Answer >>
  6. What is the average price-to-earnings ratio in the banking sector?

    The average price to earnings ratio (P/E) for banking firms, as of January 2015, is approximately 17.8. This compares with ... 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. Economics

    Explaining Forward Price-to-Earnings Ratio

    The estimated P/E of a company is often used to compare current earnings to estimated future earnings.
  6. Investing

    Unlocking The P/E Ratio For Apple

    We show you how to compute and analyze the P/E ratio for Apple.
  7. Investing

    What You Need To Know About Google's P/E Ratio

    We show you how to calculate the price to earnings ratio, a key valuation metric, for Google.
  8. Investing

    What Lies Ahead for Apple's P/E ratio

    Recently, Apple's P/E multiple has come down to levels equal to the S&P 500. What does the future hold for the tech giant's P/E ratio?
  9. Investing Basics

    What's a P&L Statement?

    A profit and loss statement, also called the income statement, is a financial statement that companies use to report their income and expenses for a quarter or a year.
  10. Investing Basics

    Analyze Investments Quickly With Ratios

    Make informed decisions about your investments with these easy equations.

You May Also Like

Hot Definitions
  1. Geometric Mean

    The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment ...
  2. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  3. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  4. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  5. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  6. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
Trading Center