What PE ratio is good for stocks? (2024)

What PE ratio is good for stocks?

To give you some sense of what the average for the market is, though, many value investors would refer to 20 to 25 as the average P/E ratio range. And again, like golf, the lower the P/E ratio a company has, the better an investment the metric is saying it is.

Is a higher PE ratio better?

If the share price falls much faster than earnings, the PE ratio becomes low. A high PE ratio means that a stock is expensive and its price may fall in the future. A low PE ratio means that a stock is cheap and its price may rise in the future. The PE ratio, therefore, is very useful in making investment decisions.

Is 30 a good PE ratio?

A P/E of 30 is high by historical stock market standards. This type of valuation is usually placed on only the fastest-growing companies by investors in the company's early stages of growth. Once a company becomes more mature, it will grow more slowly and the P/E tends to decline.

Is 5 a good PE ratio?

Very low vs very high PE ratios

It is arguable that a PE of five or less is not a remarkable bargain. While it might look as if the company's prospects are being viewed too negatively, it is not a bad rule of thumb to filter out companies with a PE below this level.

Is 40 a good PE ratio?

A high PE ratio, above 40, indicates investors willing to buy a stock at 40 times or more its earnings. Whether investing at a high PE ratio is good or bad depends on various factors.

Is 200 a high PE ratio?

A P/E ratio of 200 is high. But it is basically saying that people expect the company to grow earnings to be 15 to 20 times as large as they are now (so the P/E ratio would be 10 to 15). If you don't think that the company has that kind of potential, don't invest.

Should I buy high or low PE ratio?

Many investors say buying shares in companies with a lower P/E ratio is better because you are paying less for every dollar of earnings. A lower P/E ratio is like a lower price tag, making it attractive to investors looking for a bargain.

What is the safest PE ratio?

To give you some sense of what the average for the market is, though, many value investors would refer to 20 to 25 as the average P/E ratio range. And again, like golf, the lower the P/E ratio a company has, the better an investment the metric is saying it is.

What is the PE ratio of Apple?

As of today (2024-04-05), Apple's share price is $169.58. Apple's Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Dec. 2023 was $6.42. Therefore, Apple's PE Ratio for today is 26.41.

What is the PE ratio of Tesla?

Therefore, Tesla's PE Ratio for today is 39.70. During the past 13 years, the highest PE Ratio of Tesla was 1396.86. The lowest was 31.23. And the median was 108.59.

What is the PE ratio of Amazon?

Is 8 a high PE ratio?

Although eight is a lower P/E, and thus technically a more attractive valuation, it's also likely that this company is facing financial difficulties leading to the lower EPS and the low $2 stock price. Conversely, a high P/E ratio could mean a company's stock price is overvalued.

What PE is too high?

A “good” P/E ratio isn't necessarily a high ratio or a low ratio on its own. The market average P/E ratio currently ranges from 20-25, so a higher PE above that could be considered bad, while a lower PE ratio could be considered better.

Is 10 a low PE ratio?

For example, a P/E ratio of 10 could be normal for the utilities sector, even though it may be extremely low for a company in the tech sector. Because of this, it's important to always compare P/E ratios with other companies within the same industry.

Is 50 a high PE ratio?

The majority of P/E ratios fall anywhere from the low double digits to around 50 (the S&P 500 has a current P/E ratio of 20.09), but there are some stocks that see that metric skyrocket, leaving investors scratching their heads.

Which company has highest PE ratio?

Why is Amazon PE ratio so high?

Why is Amazon PE Ratio so high? Amazon's P/E ratio is higher than most companies in the retail industry because investors are optimistic about its future growth potential. As mentioned, a high price multiple can indicate the market expects higher growth from a company.

What is the current PE ratio of the S&P 500?

Basic Info

S&P 500 P/E Ratio is at a current level of 23.27, down from 24.59 last quarter and up from 19.17 one year ago. This is a change of -5.34% from last quarter and 21.43% from one year ago.

Is 110 PE ratio good?

Let's say we have a company with a P/E ratio of 110 that is expected to double its profits in the next 12 months. Its PEG ratio is 110 divided by 100%, equal to 1.1 – a perfectly normal figure.

What is an overrated PE ratio?

The P/E is just one of many financial metrics. Sometimes, using it in isolation can lead investors astray. Many investors – myself included – will argue that the P/E ratio is actually overrated.

Is a negative PE ratio good?

While a negative P/E ratio indicates a company is reporting losses, this is not always a sign of impending bankruptcy. A company might have a negative P/E ratio yet be on a path to growth.

Why is high PE ratio not good?

Price Earnings (P/E) ratio is one of the most popular ways of valuing a stock. The thumb rule is that a low P/E ratio is a sign of undervaluation while a high P/E ratio is a sign of overvaluation. But such an approach of purely using P/E Ratio to Value a stock is fraught with risks.

Is 7 a good PE ratio?

The price-to-earnings ratio (P/E ratio) is a quick way to gauge whether a stock is undervalued or overvalued. All else equal, the lower the P/E ratio, the better the investment. For this reason, a P/E of less than 20x is “good” and anything higher than 30x is “bad.”

How do you know if a stock is good to buy?

How do you know if I should buy a stock or not?