The
Price to
Earnings Ratio (
also known as PER
and
P/E Ratio) is calculated as the
price of a share
divided by the
Earnings per Share (
aka EPS). The price to earnings ratio is the inverse of
earnings yield.
For example, suppose that company XYZ has a
market price
of 210 cents per
share, and
earnings per share of
15 cents per share, the
PER would be:
PER = PRICE / EPS
= 210 / 15
= 14
A lower PER is better,
cet. par.