Price-to-earnings ratio (P/E)

A company's share price divided by its earnings per share over a year, or the whole company's market value divided by its profit. It says how many years of current profit buyers are paying for, and so how much future growth the price already assumes. A low ratio can signal a bargain or a business in decline; a high one can signal strong growth or optimism, so it means little without comparing it to the company's own history and its industry.