By Brian M. Reiser In this latest stock market and period of new IPOs, there are a lot of people on the Street clamoring about where a stock is selling, or its “multiple.” The reference is to the P/E ratio. While it’s one of the oldest and most frequently used metrics, it can also get you into some trouble if taken out of context.
In this article, we will define the P/E ratio, explain what it is and how you should use it. Although it can reveal important information about a company, it’s also important to understand its limitations when evaluating a company.
What Is …read more
