
Chances are you've heard the term price/earnings ratio (P/E ratio) used before. When it comes to valuing stocks, the price/earnings ratio is one of the oldest and most frequently used metrics. Although a simple indicator to calculate, the P/E is actually quite difficult to interpret. It can be extremely informative in some situations, while at other times it is next to meaningless. As a result, investors often misuse this term and place more value in the P/E than is warranted. In this tutorial, we'll introduce you to the P/E ratio and discuss how it can be used in security analysis and, perhaps more importantly, how it should not be used.
If you don't have a solid understanding of stocks and how they trade on the stock market, we also suggest that you check out our Stock Basics tutorial.
P/E Ratio: What Is It?

Investing
P/E Ratio: Introduction
Chances are you've heard the term price/earnings ratio (P/E ratio) used before. When it comes to valuing stocks, the price/earnings ratio is one of the oldest and most frequently used metrics. ... 
Investing
Can Investors Trust The P/E Ratio?
The P/E ratio is one of the most popular stock market ratios, but it has some serious flaws that investors should know about. 
Markets
How Do I Calculate the PriceEarnings Ratio?
If Apple is trading at $108.73 per share, and its trailing twelve months' EPS is $6.45, calculate the P/E ratio as... 
Markets
Getting On The Right Side Of The P/E Ratio Trend
Buying at the right time is crucial, but how do we know when that is? 
Investing
Beware False Signals From The P/E Ratio
The P/E ratio is a simple tool for evaluating a company, but no one ratio can tell the whole story. 
Investing
5 MustHave Metrics For Value Investors
These quickanddirty ratios will help you find the most undervalued stocks on the market. 
Investing
Comparing the P/E, EPS And Earnings Yield
Here are three ratios that help investors value stock returns. 
Trading
How To Use The P/E Ratio And PEG To Tell A Stock's Future
While the pricetoearnings ratio is commonly used for assessing stock prices, the price/earningstogrowth ratio offers forecasting advantages that investors need to know. 
Investing
Is Stock With a Lower P/E Always A Better Choice?
Is a stock with a lower P/E always a better investment than a stock with a higher one? The short answer is no, but it depends on a few things. 
Investing
The 4 Basic Elements Of Stock Value
Investors use these four measures to determine a stock's worth. Find out how to use them.