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.
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.
The average P/E ratio is about 20 to 25. AP/E ratio below this range is generally considered good, while a higher ratio suggests the stock may be overpriced. A high P/E ratio can result from strong investor interest, company growth, optimistic future projections, or a rising stock price with falling earnings.
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.
Apple (AAPL) PE Ratio (TTM) : 38.55 (As of Jan. 14, 2025)
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.
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.
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.
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.
Generally speaking, experts consider a PEG ratio of one or less undervalued, as its price is low compared to its expected future growth.
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.
Historically, S&P 500 PE Ratio reached a record high of 131.391 and a record low of 5.31, the median value is 17.93. Typical value range is from 20.62 to 28.66. The Year-Over-Year growth is 17%.
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.
According to Apple's latest financial reports and stock price the company's current price-to-earnings ratio (TTM) is 38.4893. At the end of 2023 the company had a P/E ratio of 29.8.
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 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.
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.
Google (GOOGL) PE Ratio (TTM) : 25.47 (As of Jan. 12, 2025)
Very low vs very high PE ratios
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.
As of today (2025-01-12), NVIDIA's share price is $135.91. 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 53.49.
As of today (2025-01-14), Palantir Technologies's share price is $64.98. Palantir Technologies's Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Sep. 2024 was $0.20. Therefore, Palantir Technologies's PE Ratio (TTM) for today is 324.90.
The estimated P/E Ratio for S&P 500 Index is 26.73, calculated on 10 January 2025. P/E Ratio is calculated on the SPY Etf, whose benchmark is the S&P 500 Index.