Account Info
Log Out
No matches yet
Operations too frequent. Please try again later.
Please check network settings and try again Refresh Refresh
History record delete
    Quotes All >
      News All >
        Log in to access Online Inquiry

        Fundamental Analysis

        Views 9872022.11.09

        Price-to-Earnings (P/E) ratio


        In this article, we will go through some questions like:

        1. What is the Price-earnings (P/E) ratio?

        2. How to use the P/E ratio?

        3. How to judge whether the P/E ratio is high or low?

        4. Limitations of using P/E Ratio?

        5. How to look up the P/E ratio on Moomoo?


        What is the Price-earnings(P/E) ratio?

        The Price-earnings ratio (P/E ratio) is one of the most commonly used indicators to assess whether the stock price level is reasonable.

        The formula is as follows:



        Key takeaway:

        The company's stock price is driven by its profitability. The P/E ratio is a measure for investors to judge whether the stock is expensive. 

        A low P/E = expected profit will decrease.

        A high P/E = expected profit will increase.

        Today we are going to introduce two P/E ratios, one is P/E (TTM) and the other is P/E (Static). The difference is because EPS comes in two main varieties.



        Generally speaking, investors use P/E (TTM) more, because the lag effect is weaker and more accurate.

        How to use the P/E ratio?

        For example: Let's try this out by calculating the P/E ratio for Apple.



        How to judge whether the P/E ratio is high or low?

        Apple has a P/E ratio of 43.05, which means investors are willing to pay up to 43 times its earnings per share to own it. How do we know is that too expensive or too cheap?

        You can use some benchmarks for comparison:



        Ultimately, it can depend on what Apple is capable of accomplishing in terms of future earnings. 

        Apple with a 43 P/E ratio has a higher growth rate than its peers, maybe because the market's expectation of Apple is optimistic in the future. 

        Limitations of using P/E ratio?

        If a company is developing rapidly but is not profitable, the P/E ratio will be negative here. Therefore, the P/E ratio can only be used for profitable companies, and it is best used for stable profitable companies. 

        If you want to know more about indicators, you can click on the article below. And Moomoo News Team will introduce other indicators in the future.

        About P/B ratio:How to tell when a stock is undervalued?

        How to look up the P/E ratio on Moomoo?

        Take Apple Inc(AAPL.US) for an example:

        Go to the Quote page



        Source: The Motley Fool, Investopedia

        Editor: Mia

        Trade like a pro with moomoo

        Get free stock and start your professional trading today

        Terms and conditions apply right-arrow

        This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. Moomoo makes no representation or warranty as to its adequacy, completeness, accuracy or timeliness for any particular purpose of the above content.

        Moomoo is a financial information and trading app offered by Moomoo Technologies Inc.

        In the U.S., investment products and services available through the moomoo app are offered by Moomoo Financial Inc., a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC) and a member of Financial Industry Regulatory Authority (FINRA)/Securities Investor Protection Corporation (SIPC).

        In Singapore, investment products and services available through the moomoo app are offered through Moomoo Financial Singapore Pte. Ltd. regulated by the Monetary Authority of Singapore (MAS). Moomoo Financial Singapore Pte. Ltd. is a Capital Markets Services Licence (License No. CMS101000) holder with the Exempt Financial Adviser Status. This advertisement has not been reviewed by the Monetary Authority of Singapore.

        In Australia, financial products and services available through the moomoo app are provided by Futu Securities (Australia) Ltd, an Australian Financial Services Licensee (AFSL No. 224663) regulated by the Australian Securities and Investment Commission (ASIC). Please read and understand our Financial Services Guide, Terms and Conditions, Privacy Policy and other disclosure documents which are available on our websites and Moomoo Technologies Inc., Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd. and Futu Securities (Australia) Ltd are affiliated companies.