Price-to-Earnings Ratio

See P/E Ratio. The price-to-earnings ratio is the most widely used valuation multiple in equity analysis, comparing a company's share price to its earnings per share. Variants include the trailing P/E (based on past earnings), forward P/E (based on projected earnings), and the Shiller P/E or CAPE ratio, which adjusts for inflation and averages earnings over ten years to smooth out business cycle effects.