The other has a share price of $50 and a PE ratio of 30. 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.
The price-to-earnings ratio (P/E ratio) is a quick way to gauge whether a stock is undervalued or overvalued. All else equal, the lower the P/E ratio, the better the investment. For this reason, a P/E of less than 20x is “good” and anything higher than 30x is “bad.”
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.
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.
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.
What if PE ratio is 40? A high P/E ratio, above 40, indicates investors willing to buy a stock at 40 times or more its earnings. Whether investing at a high PE ratio is good or bad depends on various factors.
Apple (AAPL) PE Ratio (TTM) : 38.55 (As of Jan. 14, 2025)
So, what is a good PE ratio for a stock? A “good” P/E ratio isn't necessarily a high ratio or a low ratio on its own. The market average P/E ratio currently ranges from 20-25, so a higher PE above that could be considered bad, while a lower PE ratio could be considered better.
Thus, the evidence is overwhelming that low PE stocks earn higher returns than high PE stocks over long periods. Those studies that adjust for differences in risk across stocks confirm that low PE stocks continue to earn higher returns after adjusting for risk.
P/E ratio as of December 2024 (TTM): 15.1
According to Best Buy's latest financial reports and stock price the company's current price-to-earnings ratio (TTM) is 15.0995. At the end of 2022 the company had a P/E ratio of 11.9.
In fact, every industry or sector can have different P/E ratios. Hence, there is no standard measure of a high P/E ratio. It is always in comparison with the company's competitors and peers. If you look at the FMCG sector, most companies have a P/E ratio between 25 and 50.
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 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.
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.
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.
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.
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.
A negative P/E ratio means that the company reported either no earnings per share (EPS) or negative EPS. 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.
Google (GOOGL) PE Ratio (TTM) : 25.47 (As of Jan. 12, 2025)
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 Toyota's latest financial reports and stock price the company's current price-to-earnings ratio (TTM) is 9.18095. At the end of 2022 the company had a P/E ratio of 10.2.
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.