Price-to-Earnings Ratio (P/E)

The price-to-earnings ratio (P/E) compares a company's stock price to its earnings per share (EPS). A P/E of 20 means investors pay $20 for every $1 of earnings. The trailing P/E uses the last 12 months of earnings, while the forward P/E uses projected future earnings. P/E is used to assess whether a stock is relatively expensive or cheap compared to its earnings and peers.

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