Current stock price divided by trailing annual earnings per share. If a stock sells for $25.50 per share and has earned $2.55 per share this year, then it has a trailing P/E ratio of 10 ($25.50 / $2.55 = 10). This means the stock is currently selling for ten times its earnings. Other factors being equal, investors may regard companies with lower P/Es to be relatively less expensive.
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