Price-to-earnings ratio (or P/E ratio or P/E)

The relationship between the stock price and the company’s earnings. It is a measure of the price paid for a share, relative to the annual net income or profit earned by the company (per share). The P/E is a financial ratio used for valuation: a higher P/E means investors are paying more for each unit of net income, so the stock is, technically, more expensive. P/E is calculated as stock price divided by annual earnings per share typically the net income of the company for the most recent 12-month period divided by the number of shares issued). P/E = Stock Price / EPS Private investor (or retail investor or individual investor) – An individual (not a corporation, partnership, proprietorship or any other entity whatsoever) who purchases securities for himself or herself—specifically for his/her personal investment portfolio—is not registered with any securities agency, regulatory or self-regulatory body, and is not in any way engaged in providing investment services.