| The Price-to-Earnings (P/E) ratio is a financial metric that is used to evaluate the value of a company's stock. This ratio is calculated by dividing a stock's current market price per share by its earnings per share (EPS). The P/E ratio gives investors insight into how much they pay for each dollar of a company's earnings. A high P/E ratio may suggest a stock is overvalued, possibly due to high expectations for future earnings growth. Conversely, a low P/E ratio may indicate an undervalued stock, potentially presenting a buying opportunity. It's important to note that P/E ratios vary across industries, and comparing a company's P/E to its peers or industry average can provide a more meaningful assessment. |
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