Learn how to calculate and interpret the P/E ratio , which is the relationship between a company's stock price and earnings per share. Find out the types, uses and limitations of this valuation tool and see examples of high and low P/E stocks. Learn what P/E Ratio means, how to interpret high or low P/E, and use it for smart investment analysis. Includes examples like TCS, Infosys & Zomato. The price-to-earnings (P/E) ratio , also known as the the price or earnings multiple, measures a company's current share price relative to its per-share earnings. Define P/E Ratio in Simple Terms P/E ratio , or the Price-to-Earnings ratio , is a metric measuring the price of a stock relative to its earnings per share (EPS). The P/E ratio is derived by taking the price of a share over its estimated earnings. As such, a higher value generally indicates a greater cost for a lower return, and a lower value generally indicates a greater return for a lower cost.
