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Price-to-earnings ratio (P/E)

A ratio that gives investors an idea of how much they are paying for a company's earnings , specifically whether a stock's price is high, or low, compared to its earnings. For example, if a company's stock currently sells for $50 a share and its earnings per share are $5, it would have a price-to-earnings ratio of $50 divided by 5, to equal 10.

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