P/E ratios in depth

What price-to-earnings actually says — and where it lies.

Concept

P/E is a payback story

P/E = share price ÷ earnings per share. A P/E of 20 means: if the company kept earning at the current rate, it would take 20 years of earnings to 'pay for' one share. It's a rough shorthand for how expensive a stock is relative to its profits.

Educational content only — not personalized investment, legal, or tax advice.