High PE Ratio Means What? A Good Stock?

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P/E Ratio > Forum > High PE Ratio Means What? A Good Stock?

High PE Ratio Means What? A Good Stock?
Manoj Jayale, Manager, India, Member
What is the meaning if Company A has been trading at a higher PE ratio than company B?
Does it mean we should buy this stock or not?
Can anyone explain? Thanks...
 

 
Meaning of P/E Ratio
Rajiv Singh, Student (University), United Kingdom, Member
No, it does NOT mean a good stock, nor a bad one. It just means how much a company is earning per share.
How strong the stock of a company is, also depends upon the volume of stock a company is using to trade.
When the company's P/E ratio is low this means it is generating a low income per share. However, how much total earnings it accumulates can be calculated by:
Earning per share * total volume traded.
 

     
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