Definition
A stock's price divided by its earnings per share.
The story
If a stock costs $100 and the company earns $5 a share, its P/E is 20: you're paying $20 for every $1 of yearly profit. A high P/E means investors expect strong growth, which leaves less room for disappointment.
Why markets watch it
It's a quick read on how expensive a stock or index is.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms