If a company's price-to-earnings ratio is higher than the current market PE or even the historical average of 15–17, it is said to have a high PE ratio. That being said, a higher PE number might be okay if a company grows faster than the market as a whole.
To give you some sense of what the average for the market is, though, many value investors would refer to 20 to 25 as the average P/E ratio range. And again, like golf, the lower the P/E ratio a company has, the better an investment the metric is saying it is.
One helpful benchmark when investing is to consider that the average forward P/E ratio of the S&P 500 for the last 25 years is 16-17x. Therefore, assuming the stock you are looking at has similar or better growth and risk versus the average S&P 500 company, buying at anything less than 16x is likely a bargain.
The first company's share price may be higher, but a PE ratio of 15 means you're only paying $15 for every $1 of the company's earnings. Investors in the company with a PE ratio of 30 are paying $30 for $1 of earnings.
Typically, the average P/E ratio is around 20 to 25. Anything below that would be considered a good price-to-earnings ratio, whereas anything above that would be a worse P/E ratio. But it doesn't stop there, as different industries can have different average P/E ratios.
As far as Nifty is concerned, it has traded in a PE range of 10 to 30 historically. Average PE of Nifty in the last 20 years was around 20. * So PEs below 20 may provide good investment opportunities; lower the PE below 20, more attractive the investment potential.
Although the average standard P/E ratio is around 20 to 25. Anything below that would be considered a good price-to-earnings ratio, Some world famous invester consider below 15 is good PE Ratio to invest in the stock.
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.
Apple (AAPL) PE Ratio (TTM) : 38.55 (As of Jan. 14, 2025)
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.
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.
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.
It's the price divided by earnings per share: $100 divided by five is 20x. The p/e ratio 20 (usually we denote that as 20x). This means that for every one dollar of earnings, investors are willing to pay 20 times that in value.
S&P 500 PE Ratio : 29.551 (As of 2025-01-08)
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.
As of today (2025-01-13), Walmart's share price is $93.00. Walmart's Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Oct. 2024 was $2.44. Therefore, Walmart's PE Ratio (TTM) for today is 38.16.
P/E ratio as of January 2025 (TTM): 6.32
According to Ford's latest financial reports and stock price the company's current price-to-earnings ratio (TTM) is 6.32143. At the end of 2022 the company had a P/E ratio of -23.3.
A good way of helping to understand a company's valuation is to look at it in the context of the broader stock index, or of the sector in which the company operates. For example, a PE of 15 for a house building company means little unless an investor finds that the average PE for the house building sector is 27.
BBY (Best Buy Co) PE Ratio (TTM) : 14.73 (As of Jan. 03, 2025)
Google (GOOGL) PE Ratio (TTM) : 25.47 (As of Jan. 12, 2025)
Benchmark for Determining Value– The PE ratio is a great tool for comparing a stock's worth to the index as a whole. For example, company P's PE ratio is 19 compared to the average PE ratio of 14 for the past 20 years. Compared to the historical average, a PE ratio of 14 may be deemed undervalued today.
Valuation Ratios
The trailing PE ratio is 52.61 and the forward PE ratio is 33.80. NVIDIA's PEG ratio is 0.90.
A negative P/E ratio suggests the company is currently unprofitable, as it has more expenses than revenue. It often means the company made no money over the last 12 months.