Valuation
P/E — Price-to-Earnings Ratio
Stock price divided by earnings per share.
Definition
The P/E ratio expresses how many years of current earnings investors are paying for the stock. A P/E of 20 means the stock costs 20x its annual EPS.
Formula
Stock Price ÷ EPS
Why it matters
P/E is the most common valuation shorthand. A high P/E reflects high expected growth, low risk, or both — and bakes those expectations into the price. A low P/E reflects the opposite. Neither is good or bad in isolation; both must be justified by the underlying business.
How Standard Equity uses it
We show the average historical P/E (using the year's average price) for context and apply our forward EPS estimate to derive forward P/E. Past years and "PE TTM" use reported (GAAP) EPS; analysts forecast adjusted EPS, which leaves out items such as acquisition amortisation, one-off charges and often stock-based pay. Where the adjusted forecast differs from the reported one by more than 10%, the forward P/E reads "PE (Fwd Adj)", the estimate cells carry an "adj" tag, and the tooltip gives the reported figure.
The metric
| Category | Valuation |
|---|---|
| Unit | x |