What is the P/E ratio?

A stock trades at $60, and over its last four quarters the company earned $3 per share. Its P/E is $60 ÷ $3 = 20, so buyers pay $20 for each $1 of a year's profit.

A rival in the same business trades at $45 with earnings of $3 per share, a P/E of 15. The rival is cheaper per dollar of profit today, but the market may expect the first company's profit to grow faster. A company that lost money has no meaningful P/E.

On JagSim's Research page, Compare on Pro lists P/E for up to 5 companies side by side: the share price divided by the diluted earnings per share of the last four reported quarters, or the last fiscal year where four quarters are not filed. Pro's financial statements add key ratios and 5 years of income statements, so you can see the earnings behind the figure. Free members compare the price moves of 2 companies on one chart.

P/E turns a share price into something you can compare across companies of different sizes. It is most useful against companies in the same business and against the same company's own past. JagSim gives no buy or sell recommendations, price targets or investment advice.

What is a good P/E ratio?

There is no single good number. Fast-growing businesses often carry higher P/Es than slow-growing ones, so compare a company with its own industry and its own history.

What is the difference between trailing and forward P/E?

Trailing P/E uses the last 12 months of reported earnings. Forward P/E uses analysts' estimates for the next 12 months, so it rests on forecasts that may be wrong.

What does a missing P/E mean?

The company lost money over the period, so there are no earnings to divide by. Most sites show it as not available rather than as a negative number.

Is a low P/E stock always cheap?

No. A low P/E can mean the market expects profit to fall. The figure says what buyers pay today, not what the business will earn next.