P/E Ratio

Look at the Price to Earnings (P/E) ratio to get a general idea of how the market values a stock. The P/E ratio is a measurement of a stock's price in relationship to company earnings. A high P/E ratio means that the market is paying a lot compared to what the stock is earning. A low P/E ratio means that the market isn't paying much in comparison to earnings. Don't read too much into a P/E ratio. Although this number can help you find a great stock before it is discovered by the rest of the market, it is no guarantee that a stock's price will rise or fall.