What's a good P/E ratio to buy a stock at? - Deepstash
What's a good P/E ratio to buy a stock at?

What's a good P/E ratio to buy a stock at?

Unfortunately, there's no P/E ratio set in stone that makes a stock a buy if it's below, or a sell if it's above.

Often value investors and growth investors will look for different things in a P/E ratio. 

  • Value Investors - the lower the P/E ratio the better.
  • Growth Investors - are much more likely to buy stocks with higher P/E ratios, believing the superior earnings growth more than justifies the higher cost.

162

1.26K reads

CURATED FROM

IDEAS CURATED BY

noviceinvestor

Income. Save. Invest. Spend 💡~ Making Careers & Investing Simpler

The idea is part of this collection:

How to Start Investing Today

Learn more about moneyandinvestments with this collection

How to manage risk

How to analyze investment opportunities

The importance of long-term planning

Related collections

Similar ideas to What's a good P/E ratio to buy a stock at?

How growth investors can use variations of the P/E ratio

How growth investors can use variations of the P/E ratio

Growth investors often use the P/E ratio as a building block for finding two other metrics: the forward P/E and the PEG ratios.

  • The forward P/E is calculated by dividing the stock price by the company's expected future earnings. 
  • The PEG ratio is calculated by dividing the comp...

The cornerstone to valuing stocks: The P/E ratio

The cornerstone to valuing stocks: The P/E ratio

The go-to metric for nearly all investors when it comes to valuing a stock has to be the P/E ratio. Standing for price-to-earnings, this formula is calculated by dividing the stock price by the earnings per share (EPS). The lower the P/E ratio, the more earnings power investors are buying with ea...

P/E Ratio (Price per Earning)

P/E Ratio (Price per Earning)

Let's say that a company's stock trades for $100 and that the company has earnings per share (EPS) of $6.50 over the last 12 months. 

We can calculate a trailing ("last 12 months") P/E ratio for that stock by simply dividing the stock price ("P") by the EPS ("E"), so 100/6.50 equals about 1...

Read & Learn

20x Faster

without
deepstash

with
deepstash

with

deepstash

Personalized microlearning

100+ Learning Journeys

Access to 200,000+ ideas

Access to the mobile app

Unlimited idea saving

Unlimited history

Unlimited listening to ideas

Downloading & offline access

Supercharge your mind with one idea per day

Enter your email and spend 1 minute every day to learn something new.

Email

I agree to receive email updates