What Is a P/E Ratio?

Published: January 31, 2024

P/Es are a comparative tool. They can help determine whether a stock is cheap or expensive compared with its historical averages or to similar stocks. They’re often used to tell whether the market is “expensive” at a given time. The stocks in the S&P 500 index recently traded at about 23 times earnings. Since their average over the past 30 years is closer to 19 times earnings, the index is indeed a bit expensive now, says Andrew Krei, co-chief investment officer at Crescent Grove Advisors, in Milwaukee.

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