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Lesson 2 of 2
P/E Ratio
Are you paying too much?
P/E = Price / Earnings
It measures how expensive a stock is relative to how much money the company makes.
- Low P/E (<15): "Cheap" or "Value" stock. (Banks, Oil, Old Tech)
- High P/E (>30): "Expensive" or "Growth" stock. Investors expect huge future growth. (Tesla, AI stocks)
No P/E? The company is losing money (no earnings).