Definition of price-earnings ratio in US English:

price-earnings ratio

(also price-earnings multiple)


  • The current market price of a company share divided by the earnings per share of the company.

    • ‘For decades investors have used price-earnings ratios as a measure of how expensive or cheap a stock is.’
    • ‘As you will see, a stock with a low price-earnings ratio may not be undervalued and strategies that focus on just price-earnings ratios may fail because they ignore the growth potential and risk in a firm.’