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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