P/E ratio, or price-to-earnings ratio, is a quick way to see if a stock is undervalued or overvalued. And so generally speaking, the lower the P/E ratio is, the better it is for both the business and potential investors.
Now, here's the thing: If stocks' average EPS growth is rising over time, the stock market's P/E ratio needs to settle at a higher level, as well, to fairly price in the higher profit growth. That's why today's P/E ratio of around 30 isn't as alarming as it would have been in the past.
If the share price falls much faster than earnings, the PE ratio becomes low. A high PE ratio means that a stock is expensive and its price may fall in the future. A low PE ratio means that a stock is cheap and its price may rise in the future.
A negative PE (Price/Earnings) means Earnings are negative,eaning the stock is loss making. So, do not buy the stock even by mistake.
Thus, the evidence is overwhelming that low PE stocks earn higher returns than high PE stocks over long periods.
Apple (AAPL) PE Ratio (TTM) : 38.55 (As of Jan. 14, 2025)
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. When looking at the P/E ratio alone, the lower it is, the better. For new investors, “P/E” might as well mean “physical education.”
According to Tesla's latest financial reports and stock price the company's current price-to-earnings ratio (TTM) is 115.76. At the end of 2022 the company had a P/E ratio of 30.6.
S&P 500 P/E Ratio is at a current level of 28.77, up from 27.87 last quarter and up from 23.27 one year ago. This is a change of 3.23% from last quarter and 23.62% from one year ago. The S&P 500 PE Ratio is the price to earnings ratio of the constituents of the S&P 500.
Fair Value Estimate for Nvidia
With its 2-star rating, we believe Nvidia's stock is overvalued compared to our long-term fair value estimate of $105 per share, which implies an equity value of roughly $2.5 trillion.
A beta coefficient of less than 1 means that a stock tends to be less volatile than the overall market. Utility and real estate stocks are two examples of industries that typically have low betas. A beta coefficient of more than 1 means that a stock tends to be more volatile than the overall market.
A good PE (Price to Earnings) ratio in India usually falls between 12 and 20, indicating that a company's stock is neither overvalued nor undervalued. This range balances risk and growth potential, making it ideal for Indian stock market investment.
As of today (2025-01-13), NVIDIA's share price is $132.105. NVIDIA's Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Oct. 2024 was $2.54. Therefore, NVIDIA's PE Ratio (TTM) for today is 51.99.
The PE ratio for Amazon Com stock stands at 45.9 as of Jan 10, 2025. This is calculated based on the TTM EPS of $4.77 and the stock price of $218.94 per share.
The mean historical PE ratio of Costco Wholesale over the last ten years is 35.42. The current 54.17 P/E ratio is 53% higher than the historical average. Looking back at the last ten years, COST's PE ratio peaked in the Nov 2024 quarter at 56.47, with a price of $964.01 and an EPS of $17.07.
That isn't necessarily good or bad, but a high P/E implies relatively high market expectations of what a company can achieve in the future. NVIDIA's relatively high P/E ratio indicates that NVIDIA shareholders think it will perform better than other companies in its industry classification.
Google (GOOGL) PE Ratio (TTM) : 25.47 (As of Jan. 12, 2025)
The short answer is no. The long answer is that it depends on the situation. Read on to find out more about price-to-earnings ratios, how to interpret them, the difference between a low and a high P/E ratio, and which one is better.
P/E 30 Ratio Explained
A P/E of 30 is high by historical stock market standards.
The financial health and growth prospects of AAPL, demonstrate its potential to underperform the market. It currently has a Growth Score of C. Recent price changes and earnings estimate revisions indicate this stock lacks momentum and would be a lackluster choice for momentum investors.
According to Coca-Cola's latest financial reports and stock price the company's current price-to-earnings ratio (TTM) is 24.759. At the end of 2022 the company had a P/E ratio of 28.9.
According to Microsoft's latest financial reports and stock price the company's current price-to-earnings ratio (TTM) is 36.1475. At the end of 2023 the company had a P/E ratio of 33.9.