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.
It is arguable that a PE of five or less is not a remarkable bargain. While it might look as if the company's prospects are being viewed too negatively, it is not a bad rule of thumb to filter out companies with a PE below this level.
PE 5 is the current stock price divided by the average earnings per share over the last 5 years. Metrics of this nature were originally popularized by Benjamin Graham, often called the father of value investing.
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 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.
Apple (AAPL) PE Ratio (TTM) : 38.55 (As of Jan. 14, 2025)
As a general rule of thumb: Advertised breaking strains are set at ten times the PE rating (so, a line with PE rating 5 will break at 50 lbs. at the very least), although most lines, including premium ones, almost always test well above these numbers.
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.
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.
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.
The justified price to earnings ratio is the price to earnings ratio that is “justified” by using the Gordon Growth Model. This version of the popular P/E ratio uses a variety of underlying fundamental factors such as cost of equity and growth rate.
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 P/E ratio of 5 could be considered good or bad depending on the industry and the company's growth prospects. For example, the industry average P/E for oil and gas companies is 6.3. This means that if an E&P company is trading for below that, the company is currently priced cheaper than the industry 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.
The price-to-earnings (P/E) ratio is the proportion of a company's share price to its earnings per share. A high P/E ratio could mean that a company's stock is overvalued or that investors expect high growth rates.
Investors and analysts consider stocks which have a P/E ratio of 50 or above to be an overvalued share, especially in comparison to a stock which has a ratio at par with or below 10. As it allows investors to determine that its share prices are considerably higher than what a company can afford to pay as dividends.
"Traditional valuation measures suggest the S&P 500 is currently more than 20% overvalued, yet trend-following measures, like momentum, remain strong."
When a PE rating is applied to fishing line it's simply as a measure of the lines diameter – not the lines breaking strain. In fact, a line rated PE 5, for example, may break at 30lb, 50lb, 90lb or anywhere in between.
This is why the most beneficial rating range falls somewhere between 4.2 and 4.5 stars. It's that golden area where reviews are still overwhelmingly positive, but investigative customers wary of their spending will still be able to find negative opinions to prove the trustworthiness of the seller.
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As of today (2025-01-12), Tesla's share price is $394.74. Tesla's Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Sep. 2024 was $3.65. Therefore, Tesla's PE Ratio (TTM) for today is 108.15.
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.