What is a good PE ratio for a stock? (2024)

What is a good PE ratio for a stock?

In this article: What does a good P/E ratio mean? In simple terms, a good P/E ratio is lower than the average P/E ratio, which is between 20–25.

Is 0.5 a good PE ratio?

The ratio is calculated by dividing the price-earnings ratio by the sum of the earnings growth rate and the dividend yield. With this modified technique, ratios above one are considered poor, while ratios below 0.5 are considered attractive.

What is the average PE ratio by industry?

Is a PE ratio of 50 good?

In the heat of a bull market, it's not uncommon to find "hot" stocks trading at a P/E of 50 or more. While this can go on for some time, eventually the stock's price may drop.

What is the PE ratio of Apple?

As at Apr 22, 2024, the AAPL stock has a PE ratio of 25.67. This is based on the current EPS of $6.46 and the stock price of $165.84 per share. A decrease of 13% has been seen in the P/E ratio compared to the average of 29.5 of the last 4 quarters.

Is PE ratio a good indicator?

While P/E ratios are not the magical prognostic tool some once thought they were, they can still be valuable when used the properly. Remember to compare P/E ratios within a single industry, and while a particularly high or low ratio may not spell disaster, it is a sign worth taking into consideration.

What is the rule of thumb for PE ratio?

What is a good price to equity ratio? There is no single answer to this question as it can depend on a number of factors. However, as a general rule of thumb, a P/E ratio below 15 could be considered undervalued while a P/E ratio above 25 could be considered overvalued.

What is the PE ratio of Tesla?

As of today (2024-04-23), Tesla's share price is $142.13. Tesla's Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Dec. 2023 was $4.31. Therefore, Tesla's PE Ratio for today is 32.98.

What is a 2.5 PE ratio?

P/E ratio example

Now, if another company in the same industry also has a share price of $50 but an EPS of $20, its P/E ratio would be 2.5, meaning it would cost $2.50 to purchase $1 of that company's earnings. The second company is the better value, in theory, if all other variables are equal.

What is Coca Cola's average PE ratio?

Coca-Cola's p/e ratio for fiscal years ending December 2019 to 2023 averaged 27.8x. Coca-Cola's operated at median p/e ratio of 28.3x from fiscal years ending December 2019 to 2023. Looking back at the last 5 years, Coca-Cola's p/e ratio peaked in December 2019 at 30.6x.

Why is Costco PE ratio so high?

Strong customer loyalty, profitable store growth, and consistently higher profitability have led to an ever-increasing share price. That means you'll pay up to buy the shares. Costco's price-to-earnings (P/E) ratio stands at 49. That's much higher than the S&P 500's P/E multiple of 27.

What is considered an overvalued PE ratio?

A high P/E ratio for a fast-growing company may make a lot of sense, so it's important to understand the growth outlook before making a judgment solely based on the P/E ratio. A PEG ratio above 2 is typically considered expensive, while a ratio below 1 may indicate a good deal.

How do you know if a stock is overvalued?

A high P/E ratio may indicate overvaluation, as it suggests that investors are willing to pay a premium for each dollar of earnings generated. Comparing a company's P/E ratio to its historical average or industry peers can provide insights into whether the stock is trading at a higher valuation.

What is the PE ratio in simple terms?

The price-to-earnings (P/E) ratio is the proportion of a company's share price to its earnings per share. A high P/E ratio could mean that a company's stock is overvalued or that investors expect high growth rates.

Is 30 a bad PE ratio?

P/E 30 Ratio Explained

A P/E of 30 is high by historical stock market standards. This type of valuation is usually placed on only the fastest-growing companies by investors in the company's early stages of growth. Once a company becomes more mature, it will grow more slowly and the P/E tends to decline.

What is Walmart's PE ratio?

As of today (2024-04-11), Walmart's share price is $60.44. Walmart's EPS without NRI for the trailing twelve months (TTM) ended in Jan. 2024 was $4.18. Therefore, Walmart's PE Ratio without NRI for today is 14.47.

What is Amazon forward PE ratio?

Amazon.com's Forward PE Ratio for today is 43.29. Amazon.com's PE Ratio without NRI for today is 65.15. Amazon.com's PE Ratio for today is 63.21.

What is the PE ratio of Samsung?

P/E ratio as of April 2024 (TTM): 14.4

According to Samsung's latest financial reports and stock price the company's current price-to-earnings ratio (TTM) is 14.3611. At the end of 2022 the company had a P/E ratio of 6.86.

Why is Amazon PE ratio so high?

Why is Amazon PE Ratio so high? Amazon's P/E ratio is higher than most companies in the retail industry because investors are optimistic about its future growth potential. As mentioned, a high price multiple can indicate the market expects higher growth from a company.

Do I want a high or low PE ratio?

A higher PE suggests high expectations for future growth, perhaps because the company is small or is an a rapidly expanding market. For others, a low PE is preferred, since it suggests expectations are not too high and the company is more likely to outperform earnings forecasts.

What is the average PE ratio for growth stocks?

Growth stocks generally have high price-to-earnings (P/E) ratios and high price-to-book ratios. The P/E ratio is the market value per share divided by the current year's earnings per share.

How do you analyze PE ratio?

The PE ratio is calculated by dividing the price of a stock or an index by the earnings per share , or EPS, (net profit divided by the number of common shares outstanding). For example, if a stock is trading at ₹50 and its earnings per share is ₹10, then the PE ratio is 50/10=5.

What if PE ratio is 5?

If a company has a PE ratio of 5, then investors believe that the profits are unlikely to continue and the company is believed to be headed for trouble. GM has a PE ratio of 7.24 which is low because even though it is profitable at this time, investors are not optimistic at all about its future.

What is a low PE ratio?

Low P/E. Companies with a low Price Earnings Ratio are often considered to be value stocks. It means they are undervalued because their stock prices trade lower relative to their fundamentals. This mispricing will be a great bargain and will prompt investors to buy the stock before the market corrects it.

What is the PE ratio of the S&P 500?

S&P 500 P/E Ratio is at a current level of 24.79, up from 23.27 last quarter and up from 22.23 one year ago. This is a change of 6.51% from last quarter and 11.53% from one year ago. The S&P 500 PE Ratio is the price to earnings ratio of the constituents of the S&P 500.