Price-Earnings Ratio (P/E ratio)*
The most common measure of how expensive a stock is. Determined by dividing current stock price by current earnings per share (adjusted for stock splits). Earnings per share for the P/E ratio are determined by dividing earnings for the past 12 months by the number of common shares outstanding. Higher multiple means investors have higher expectations for future growth and have bid up to the stock’s price. The value is the same whether the calculation is done for the whole company or on a per-share basis. Also called Earnings Multiple.