price-earnings ratio

noun
price-earn·​ings ratio

Definition of price-earnings ratio

: a measure of the value of a common stock determined as the ratio of its market price to its annual earnings per share and usually expressed as a simple numeral

Examples of price-earnings ratio in a Sentence

Recent Examples on the Web To many Wall Street veterans, a correction to this summer’s almost 80% surge in the Nasdaq 100 was overdue, with the index’s price-earnings ratio expanding to the highest level since the dot-com era. Vildana Hajric, Bloomberg.com, "Day Traders Unbowed by $2 Trillion Rout Reup Bullish Stock Bets," 9 Sep. 2020 At Tuesday’s close, the S&P 500 Index price-earnings ratio stood above 25 times, well above the 17 times that has historically proved to be sustainable. Ven Ram, Bloomberg.com, "Post-Rout, Risk-Reward Is Still Skewed Versus Pricey U.S. Stocks," 9 Sep. 2020 At its peak, the Japanese equity market traded at four times the price-earnings ratio of the American market. Andrew Stuttaford, National Review, "The Capital Note: Stimulus, at Home & Abroad," 2 Sep. 2020 Apple has a price-earnings ratio--the ratio of its market valuation to its profits--of about 33. Arkansas Online, "OPINION | PAUL KRUGMAN: Stocks are climbing. So is misery," 22 Aug. 2020 According to data collected by Charles Schwab, in the past, when inflation has mirrored the levels of today, the price-earnings ratio for the S&P 500 based on future profits has averaged 16.4. Sarah Ponczek, Bloomberg.com, "Extreme Valuation Cases Wanted for a Red-Hot Rally in Equities," 19 May 2020 Woodward shares have risen 60% in the past year, with a price-earnings ratio of 26, while Hexcel has gained 21%, with a valuation of 21 times earnings. Linus Chua, Bloomberg.com, "Woodward to Combine With Hexcel in All-Stock Transaction," 10 May 2020 The startup-heavy ChiNext index trades at a price-earnings ratio of 45. Washington Post, "Missing Unicorns Cast Doubt on Shanghai’s Tech Dream," 1 Apr. 2019 Even with the sell-off over the past 12 months, the shares still trade on a forward price-earnings ratio of over 30, an about 50% premium to the Bloomberg Intelligence global valuation peer group. Washington Post, "Even DIY Cocktails Can’t Help Brexit Blues," 20 Nov. 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'price-earnings ratio.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of price-earnings ratio

1929, in the meaning defined above

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The first known use of price-earnings ratio was in 1929

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Last Updated

9 Oct 2020

Cite this Entry

“Price-earnings ratio.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/price-earnings%20ratio. Accessed 21 Oct. 2020.

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