On this episode of the Finance Flash Go! podcast, we’re talking about stock P/E ratios.
Listen to the full episode and subscribe here!
The P/E ratio helps investors determine the market value of a stock as compared to the company’s earnings. In short, the P/E shows what the market is willing to pay today for a stock based on its past or future earnings.
A high P/E could mean that a stock’s price is high relative to earnings and possibly overvalued. Conversely, a low P/E might indicate that the current stock price is low relative to earnings.
However, companies that grow faster than average typically have higher P/Es, such as technology companies. A higher P/E ratio shows that investors are willing to pay a higher share price today because of growth expectations in the future.
The average P/E for the S&P 500 has historically ranged from 13 to 15. For example, a company with a current P/E of 25, above the S&P average, trades at 25 times earnings.
Related posts:
How to Find the Perfect Balance Between FIRE & YOLO
5 Easy Steps for Physicians Who Hate Personal Finance
Finance Flash Go! Episode #45: Small Cap vs. Mid Cap vs. Large Cap Stocks
My Stock Portfolio Is Better Than Your Financial Advisor’s
Stress Free Stock Market Investing Is Easier Than It Seems!
Important Money Lessons That I Learned From My Wife
Finance Flash Go! Episode #44: Understanding Growth vs. Value Stocks
I really hope that you all enjoy the Finance Flash Go podcast! We plan to release a new episode every weekday answering important finance questions. If you ever want to submit a question to our podcast, send an e-mail to [email protected].
And please subscribe and give us a 5-star rating if you enjoy the podcast! It helps us continue our mission of helping all of us to achieve financial well-being!
