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The cyclically adjusted price-to-earnings ratio, commonly known as CAPE, [1] Shiller P/E, or P/E 10 ratio, [2] is a stock valuation measure usually applied to the US S&P 500 equity market. It is defined as price divided by the average of ten years of earnings ( moving average ), adjusted for inflation. [ 3 ]
When you buy stock, you're essentially buying a tiny piece of the company it represents. Understanding how profitable the company is in relation to its stock price can be an important consideration...
In general, the P/E ratio is higher for a company with a higher growth rate. Thus, using just the P/E ratio would make high-growth companies appear overvalued relative to others. It is assumed that by dividing the P/E ratio by the earnings growth rate, the resulting ratio is better for comparing companies with different growth rates. [1]
There are multiple versions of the P/E ratio, depending on whether earnings are projected or realized, and the type of earnings. "Trailing P/E" uses the weighted average share price of common shares in issue divided by the net income for the most recent 12-month period. This is the most common meaning of "P/E" if no other qualifier is specified.
It was proposed by investor and professor of Columbia University, Benjamin Graham - often referred to as the "father of value investing". [ 1 ] Published in his book, The Intelligent Investor , Graham devised the formula for lay investors to help them with valuing growth stocks, in vogue at the time of the formula's publication.
The AOL mobile app for Apple iOS and Android gives you organized and secure email, breaking news, premium videos, weather and more.
Learn more about the AOL app and download it from Google Play. The AOL app is available for Android devices running Android 9.0 or newer. 1. Open the Google Play Store on your device. 2. Type "AOL" in the search field. 3. Choose AOL - News, Mail & Video from the search results. 4. Tap Install. 5. Tap Open. If you're unable to update the AOL app ...
The Google Play Store (originally the Android Market), operated and developed by Google, serves as the official app store for Android, allowing users to download apps developed with the Android software development kit (SDK) and published through Google. The store offers both free and paid apps.