Why Are PE Ratios So High?

A high P/E ratio may suggest that investors are expecting higher earnings growth in the future compared to companies with a lower P/E.

The P/E ratio indicates the dollar amount an investor can expect to invest in a company so that they may receive one dollar of that company’s earnings.

What is a high PE ratio?

The P/E ratio helps investors determine the market value of a stock as compared to the company’s earnings. A high P/E could mean that a stock’s price is high relative to earnings and possibly overvalued. Conversely, a low P/E might indicate that the current stock price is low relative to earnings.

Why is Amazon’s PE ratio so high?

Main Reason / TLDR: Amazon’s P/E is high, because the market is pricing Amazon as a tech company (with high future earnings potential from high margin products/services), on Amazon’s present lower earnings as a retail company (low margin, high revenue retail sales).

Is a high P E ratio good or bad?

For some investors, a high PE ratio might be deemed attractive. For others, a low PE is preferred, since it suggests expectations are not too high and the company is more likely to outperform earnings forecasts. Buying a stock is essentially buying a portion of that company’s future earnings.

What company has the highest P E ratio?

Amazon.com Inc. Boston Properties Inc. Salesforce.com (NYSE:CRM) has the highest P/E ratio.

What is Tesla’s PE ratio?

Tesla PE Ratio. As of today (2020-04-03), Tesla’s share price is $486.48. Tesla’s Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Dec. 2019 was $-5.07.

What is a good PE ratio to buy?

A higher P/E ratio shows that investors are willing to pay a higher share price today because of growth expectations in the future. The average P/E for the S&P 500 has historically ranged from 13 to 15. For example, a company with a current P/E of 25, above the S&P average, trades at 25 times earnings.

What is the good PE ratio?

Common Sense Investing Using the P/E Ratio

A P/E ratio of 40 is really high, a P/E ratio of 7 is really low, and a ratio of 14 represents the average over modern history. Armed with this information, you can look up the current P/E ratio of the stock market and figure out where things are relative to historical times.

What is Amazon’s PE ratio?

As of today (2020-04-22), Amazon.com’s share price is $2328.12. Amazon.com’s Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Dec. Therefore, Amazon.com’s PE Ratio for today is 101.18.

What is the P E ratio of the S&P 500 today?

Stats

Last Value23.16
Last UpdatedApr 8 2020, 12:32 EDT
Average Growth Rate8.46%
Value from 1 Year Ago18.94
Change from 1 Year Ago22.34%

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What is average PE ratio?

The average P/E ratio of the market is about 14.