Answered By: Susan Van Alstyne Last Updated: Aug 11, 2015 Views: 91
“P/E” stands for Price/Earnings ratio. It is calculated by dividing the price of a share of stock by earnings per share (EPS), which is often based on what is called the last historical year. But careful here, as there is more than one type of EPS. A P/E ratio is one of many ways to evaluate the strength of a company. However, P/E ratios can be tricky things and do not always predict company worth in a consistent manner. This issue may be something you want to discuss with your professor. Or you can look at the entry in a textbook or economic encyclopedia/dictionary for more information.
- Berkeley’s Credo Reference database is a good place to look.
- Note: Because the price of stock can change from day to day and hour to hour, it is best calculated at the time of evaluation.
The following Berkeley database provides P/E ratios that are already calculated. Note that the calculation will be based upon dated information. It is important to note the date of all material that we find in databases.
- Enter the name of the company you want to research.
- Look at the top of the page. On the right-hand side you will find both the date and time and the P/E ratio. Important Note: This P/E ratio is not necessarily the most current one associated with the date and time on the page, but is based on past information.
- Make sure to double-check with your professor and ask how s/he would like you to calculate this number.
The Internet has some resources that are also helpful when following the stock market.
- Search for the name of the company you wish to research
- When you refresh the page, you will see that the P/E ratio can change from minute to minute.