Question

What does the P/E ratio tell an investor about a company? What is the P/E ratio of Apple, Inc? What is the P/E ratio of Wal-Mart?

Answer 1

P/E ratio is the ratio of price per share to net income per share of a company. It represent the Price for historical or past earnings of a company.. It is a comparative ratio which is used to compare with similar companies. A lower P/E ratio might indicate an undervalued firm. A excessively high P/E ratio might indicate an overvalued firm.It is also used to compare it current performance as compared to its past performance to check whether performance of company has improved or deteriorated.Forward P/E ratio is more useful as compared to trailing P/E.This is because of a stock should be based on future earnings and not past earnings.

P/E ratio of Apple Inc =35.59
P/E ratio of Walmart =22.32