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Price-to-Earnings Ratio

Trading Term

The Price-to-Earnings (P/E) Ratio measures the Current Share Price of a firm against its Earnings Per Share. This valuation metric aids in stock analysis by determining whether the asset is undervalued or overvalued. The Price-to-Earnings (P/E) Ratio indicates the dollar amount one can expect to invest in a firm in order to receive one dollar of their earnings. Price-to-Earnings (P/E) Ratio = Current Share Price / Earnings Per Share

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