P/E Ratio

Definition

Price-to-Earnings ratio, a metric that tells you how many years of current earnings you're paying for a stock. A P/E of 500 means investors expect the company to be printing money for five centuries, or that the market has collectively lost its mind. Usually the latter.

Example Usage

"The company has a P/E ratio of 1,200. At that rate, the investment pays for itself right around the time the sun explodes."

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