The P/E ratio for "the whole market" has historically been between 15 and 25, so that's a fairly sound predictor of which way the indexes are likely to move in the near-term...
The P/E for the entire ^DJIA was 16.24 at last close, which means it's more likely to move up today than down... http://online.wsj.com/mdc/public/page/2_... (Absent any other significant events...)
There is no such thing as a "good" PE ratio. A company that is growing by 50% per year and is expected to continue would be a bargain at a PE of 30 while a large mature company like Microsoft would be considered costly at a PE of 20. Generally, the overall market is considered fairly valued at an average PE of 16-18.
PE's are best used to compare two similar companies in the same industry.
8
It means nothing or very little. You could compare a company's p/e to that of its peers. But have the earnings been calculated by the same methods?
P/E ratio stands for Price Earning Ratio. Actually P/E ratio tells us how much investor are willing to pay for per dollar of earning. $20 for every $1 that could be the best P/E ratio.
You have to average the P/E ratio of the sector or industry to compare to one company to determine if it is good or not.
Just wondering what a good P/E ratio for stocks. I just want your opinion. I know they vary from industry to industry, but there has to be some realistic number that sounds good a lot of the times. I don't have much history in researching the P/E ratios, I'm just asking those who do.
