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Earnings per share ... company’s profit per share. However, the P/E ratio can help investors understand whether they’re paying a lot for the company’s earnings or a little. For example, a ...
Earnings per share (EPS) is the monetary value of earnings per outstanding share of common stock for a company during a defined period of time. It is a key measure of corporate profitability, focusing on the interests of the company's owners ( shareholders ), [ 1 ] and is commonly used to price stocks.
Now that the analyst has several EPS figures (historical and forecasts), the analyst will be able to look at the most common valuation technique used, the price to earnings ratio, or P/E. To compute this figure, one divides the stock price by the annual EPS figure. For example, if the stock is trading at $10 and the EPS is $0.50, the P/E is 20 ...
As an example, if share A is trading at $24 and the earnings per share for the most recent 12-month period is $3, then share A has a P/E ratio of $24 / $3/year = 8 years. Put another way, the purchaser of the share is expecting 8 years to recoup the share price.
Earnings per share can be used with other financial indicators to understand a company's profitability. But how is it calculated and how useful is it, really?
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The 'PEG ratio' (price/earnings to growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share , and the company's expected growth. In general, the P/E ratio is higher for a company with a higher growth rate. Thus, using just the P/E ratio would make high-growth ...
Earnings per Share (EPS), Dividend ratio, Price/Earnings (P/E) ratio All the ratios listed above can be written as industry averages (something) such as industry averages profitability ratio, represents for the average figures of profitability ratio for a certain industry. [ 18 ]