In the context of stocks, "P" and "E" have specific meanings related to financial metrics:
- P/E Ratio: The P/E ratio, also known as the price-to-earnings ratio, is a valuation metric used to compare a company's current share price to its per-share earnings. It helps investors determine whether a stock is overvalued or undervalued. The formula for calculating the P/E ratio is: P/E Ratio = Market value per share / Earnings per share12.
- Per Share (P/S): In the context of dividends, "per share" refers to the amount of dividends paid or expected to be paid out to each outstanding share of stock. For example, if a company pays a dividend of $0.50 per share, it means that for each outstanding share, the holder will receive $0.50 in dividends34.
- Earnings Per Share (EPS): As mentioned earlier, EPS is the monetary value of earnings per outstanding share of common stock. It is a key measure of corporate profitability and is commonly used to price stocks54.
In summary, "P" in the context of stocks often refers to the share price or the market value per share, while "E" refers to earnings per share or the monetary value of earnings per outstanding share of common stock. These metrics are fundamental to understanding a company's financial health and valuation in the stock market.