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.”
If the P/E ratio is high: In some cases, a high P/E ratio can mean investors believe that the stock's earnings will increase in the future. On the other hand, a high P/E ratio can indicate that a stock may be overvalued. If the P/E ratio is low: Alternatively, a low P/E ratio may indicate that a stock is undervalued.
Market Comparison: Compare the company's P/E ratio with the overall market average. If the market average P/E is 20 and a company's P/E is 30, it might indicate that investors are expecting higher growth from this company relative to the market.
Usually, the market considers a P/E ratio below 20 as a good investment opportunity. 3. 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.
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.
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.
Apple (AAPL) PE Ratio (TTM) : 38.55 (As of Jan. 14, 2025)
According to Tesla's latest financial reports and stock price the company's current price-to-earnings ratio (TTM) is 118.273. At the end of 2022 the company had a P/E ratio of 30.6.
The current S&P500 10-year P/E Ratio is 36.5. This is 79.2% above the modern-era market average of 20.4, putting the current P/E 2.0 standard deviations above the modern-era average.
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.
Why is Amazon's price-to-earnings ratio so high? It's simple—Amazon doesn't trade based on earnings. Amazon stock's P/E ratio is so high because the company continues to invest in R&D, which increases their capital expenditure AND lower their reported earnings.
In May 2009, the P/E ratio reached a staggering 123.73x, the highest ratio in United States history. This was primarily due to the depressed earnings during the “Great Recession” and has been the only instance since 1970 in which the P/E ratio reached triple digits.
What is the average PE Ratio of the Banks industry? The average industry PE Ratio of Banks is 13.7 as on 10 Jan 2025.
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.
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.
Apple's analyst rating consensus is a Moderate Buy. This is based on the ratings of 29 Wall Streets Analysts.
Google (GOOGL) PE Ratio (TTM) : 25.47 (As of Jan. 12, 2025)
P/B ratio reflects how many times book value investors are ready to pay for a share. So, if the share price is $10 and the book value of equity is $5, investors are ready to pay two times the book value. Ideally, a P/B value under 1.0 is considered good as it indicates that the stock is potentially undervalued.
What is a good PE ratio in India? A good P/E ratio isn't always a high or low ratio on its own. The market average P/E ratio is currently between 20 and 25. Therefore a higher PE ratio above that may be deemed negative, while a lower PE ratio may be considered better.
The average dividend yield of some of the top dividend stocks is 12.69%. The best dividend stocks are shares of well-established companies that increase their payouts over time. Investors can also choose to reinvest dividends if they don't need the stream of income. Here's more about dividends and how they work.
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.