Definition of P/E ratio
Price Earnings ratio. The ratio of a company's share price to the profits per share (earnings per share or EPS). It shows how much investors are prepared to pay per £1 of profit (or how many years it would take to get your money back if profits continue at the same rate). The higher the PE ratio, the higher investors rate your shares. This is usually because they like the quality and predict good growth without too much risk.
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