Thursday, August 18, 2011 4:56:09 PM
You need to study the principles a little more before making comments on things you clearly do not have a grasp on yet.
Here's how you calculate the P/E Ratio:
You calculate the P/E by taking the share price and dividing it by the company’s EPS(earnings per share). P/E = Stock Price / EPS. For example, a company with a share price of $40 and an EPS of $8 would have a P/E of 5 ($40 / $8 = 5) .
As you can see the P/E Ratio has nothing to do with future earnings. It just means that the stock (in the example) is currently trading at 5 times the current earnings. The share price is determined by what people are willing to pay for the stock.
Here's how you calculate the P/E Ratio:
You calculate the P/E by taking the share price and dividing it by the company’s EPS(earnings per share). P/E = Stock Price / EPS. For example, a company with a share price of $40 and an EPS of $8 would have a P/E of 5 ($40 / $8 = 5) .
As you can see the P/E Ratio has nothing to do with future earnings. It just means that the stock (in the example) is currently trading at 5 times the current earnings. The share price is determined by what people are willing to pay for the stock.
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