What is a reasonable PE ratio for a stock? (2024)

What is a reasonable PE ratio for a stock?

Typically, the average P/E ratio is around 20 to 25. Anything below that would be considered a good price-to-earnings ratio, whereas anything above that would be a worse P/E ratio. But it doesn't stop there, as different industries can have different average P/E ratios.

Is 0.5 a good PE ratio?

The ratio is calculated by dividing the price-earnings ratio by the sum of the earnings growth rate and the dividend yield. With this modified technique, ratios above one are considered poor, while ratios below 0.5 are considered attractive.

What is the average PE ratio by industry?

Is a PE ratio of 50 good?

In the heat of a bull market, it's not uncommon to find "hot" stocks trading at a P/E of 50 or more. While this can go on for some time, eventually the stock's price may drop.

What is considered an overvalued PE ratio?

A high P/E ratio for a fast-growing company may make a lot of sense, so it's important to understand the growth outlook before making a judgment solely based on the P/E ratio. A PEG ratio above 2 is typically considered expensive, while a ratio below 1 may indicate a good deal.

What is the PE ratio of Apple?

The mean historical PE ratio of Apple over the last ten years is 20.3. The current 25.54 PE ratio is 26% above the historical average. Over the past ten years, AAPL's PE ratio was at its highest in the Dec 2020 quarter at 35.29, with a price of $131.97 and an EPS of $3.74.

What is the PE ratio of Tesla?

As of today (2024-04-23), Tesla's share price is $142.13. Tesla's Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Dec. 2023 was $4.31. Therefore, Tesla's PE Ratio for today is 32.98.

Can a low PE ratio be bad?

In general, a high P/E suggests that investors expect higher earnings growth than those with a lower P/E. A low P/E can indicate that a company is undervalued or that a firm is doing exceptionally well relative to its past performance.

What is a 2.5 PE ratio?

P/E ratio example

Now, if another company in the same industry also has a share price of $50 but an EPS of $20, its P/E ratio would be 2.5, meaning it would cost $2.50 to purchase $1 of that company's earnings. The second company is the better value, in theory, if all other variables are equal.

What is Coca Cola's average PE ratio?

Coca-Cola's p/e ratio for fiscal years ending December 2019 to 2023 averaged 27.8x. Coca-Cola's operated at median p/e ratio of 28.3x from fiscal years ending December 2019 to 2023. Looking back at the last 5 years, Coca-Cola's p/e ratio peaked in December 2019 at 30.6x.

Why is Costco PE ratio so high?

Strong customer loyalty, profitable store growth, and consistently higher profitability have led to an ever-increasing share price. That means you'll pay up to buy the shares. Costco's price-to-earnings (P/E) ratio stands at 49. That's much higher than the S&P 500's P/E multiple of 27.

What is the PE ratio of the S&P Tech?

The estimated P/E Ratio for S&P 500 Information Technology Sector is 32.89, calculated on 18 April 2024.

How do you know if a stock is overvalued?

A high P/E ratio may indicate overvaluation, as it suggests that investors are willing to pay a premium for each dollar of earnings generated. Comparing a company's P/E ratio to its historical average or industry peers can provide insights into whether the stock is trading at a higher valuation.

What is a good forward PE ratio?

What is a good forward PE ratio? An excellent forward PE ratio is between 10-25 for major stocks since stocks with a forward PE below 10 can often be a value trap. On the other hand, those above 25 can be too expensive as they are priced with irrationally high growth anticipations.

Is 30 a bad PE ratio?

P/E 30 Ratio Explained

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.

What is undervalued PE?

A low PE ratio is a valuation metric that indicates a stock's price is low relative to its earnings. Generally, one may consider low PE ratio stocks as undervalued. Thus, identifying low PE ratio stocks is important because it can help you find undervalued companies.

What are the most overvalued stocks right now?

How do you know if your PE is overvalued?

Key Takeaways. The P/E ratio is calculated by dividing the market value price per share by the company's earnings per share. A high P/E ratio can mean that a stock's price is high relative to earnings and possibly overvalued. A low P/E ratio might indicate that the current stock price is low relative to earnings.

What is Walmart's PE ratio?

As of today (2024-04-11), Walmart's share price is $60.44. Walmart's EPS without NRI for the trailing twelve months (TTM) ended in Jan. 2024 was $4.18. Therefore, Walmart's PE Ratio without NRI for today is 14.47.

What is Pfizer's average PE ratio?

The mean historical PE ratio of Pfizer over the last ten years is 19.56. The current 66.89 P/E ratio is similar to the historical average. Looking back at the last ten years, PFE's PE ratio peaked in the Dec 2023 quarter at 75.76, with a price of $28.79 and an EPS of $0.38.

What is Amazon forward PE ratio?

Amazon.com's Forward PE Ratio for today is 43.29. Amazon.com's PE Ratio without NRI for today is 65.15. Amazon.com's PE Ratio for today is 63.21.

What is the PE of Nvidia?

As at Apr 19, 2024, the NVDA stock has a PE ratio of 63.24. This is based on the current EPS of $12.05 and the stock price of $762 per share. A decrease of 29% has been seen in the P/E ratio compared to the average of 89.6 of the last 4 quarters.

What is the safest PE ratio?

Average PE of Nifty in the last 20 years was around 20. * So PEs below 20 may provide good investment opportunities; lower the PE below 20, more attractive the investment potential.

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.

Is PE ratio below 5 good?

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.