Answered By: Berkeley College Library
Last Updated: Jul 22, 2022     Views: 757

“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.

  1. Berkeley’s Credo Reference database is a good place to look.
  2. 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 Internet has some resources that are also helpful when following the stock market.

Big Charts   

  1. Search for the name of the company you wish to research
  2. When you refresh the page, you will see that the P/E ratio can change from minute to minute.

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