QQQ   358.92 (+0.18%)
AAPL   173.16 (+1.14%)
MSFT   318.32 (+0.81%)
META   303.53 (+1.11%)
GOOGL   133.09 (+1.70%)
AMZN   128.67 (+1.22%)
TSLA   250.99 (+0.31%)
NVDA   445.93 (+2.52%)
NIO   8.80 (-2.65%)
BABA   86.13 (-0.70%)
AMD   102.60 (-0.21%)
T   14.79 (-1.53%)
F   12.31 (-0.89%)
MU   67.56 (-0.69%)
CGC   0.76 (-3.41%)
GE   108.15 (-2.17%)
DIS   80.96 (-0.11%)
AMC   7.94 (-0.63%)
PFE   33.41 (+0.72%)
PYPL   58.15 (-0.53%)
NFLX   379.02 (+0.38%)
QQQ   358.92 (+0.18%)
AAPL   173.16 (+1.14%)
MSFT   318.32 (+0.81%)
META   303.53 (+1.11%)
GOOGL   133.09 (+1.70%)
AMZN   128.67 (+1.22%)
TSLA   250.99 (+0.31%)
NVDA   445.93 (+2.52%)
NIO   8.80 (-2.65%)
BABA   86.13 (-0.70%)
AMD   102.60 (-0.21%)
T   14.79 (-1.53%)
F   12.31 (-0.89%)
MU   67.56 (-0.69%)
CGC   0.76 (-3.41%)
GE   108.15 (-2.17%)
DIS   80.96 (-0.11%)
AMC   7.94 (-0.63%)
PFE   33.41 (+0.72%)
PYPL   58.15 (-0.53%)
NFLX   379.02 (+0.38%)
QQQ   358.92 (+0.18%)
AAPL   173.16 (+1.14%)
MSFT   318.32 (+0.81%)
META   303.53 (+1.11%)
GOOGL   133.09 (+1.70%)
AMZN   128.67 (+1.22%)
TSLA   250.99 (+0.31%)
NVDA   445.93 (+2.52%)
NIO   8.80 (-2.65%)
BABA   86.13 (-0.70%)
AMD   102.60 (-0.21%)
T   14.79 (-1.53%)
F   12.31 (-0.89%)
MU   67.56 (-0.69%)
CGC   0.76 (-3.41%)
GE   108.15 (-2.17%)
DIS   80.96 (-0.11%)
AMC   7.94 (-0.63%)
PFE   33.41 (+0.72%)
PYPL   58.15 (-0.53%)
NFLX   379.02 (+0.38%)
QQQ   358.92 (+0.18%)
AAPL   173.16 (+1.14%)
MSFT   318.32 (+0.81%)
META   303.53 (+1.11%)
GOOGL   133.09 (+1.70%)
AMZN   128.67 (+1.22%)
TSLA   250.99 (+0.31%)
NVDA   445.93 (+2.52%)
NIO   8.80 (-2.65%)
BABA   86.13 (-0.70%)
AMD   102.60 (-0.21%)
T   14.79 (-1.53%)
F   12.31 (-0.89%)
MU   67.56 (-0.69%)
CGC   0.76 (-3.41%)
GE   108.15 (-2.17%)
DIS   80.96 (-0.11%)
AMC   7.94 (-0.63%)
PFE   33.41 (+0.72%)
PYPL   58.15 (-0.53%)
NFLX   379.02 (+0.38%)

High PE Ratio Stocks

This page lists companies that have unusually high price-to-earnings ratios (PE Ratios), which is a common financial ratio used for valuing a stock. A stock's PE ratio is calculated by taking its share price and divided by its annual earnings per share. A higher PE ratio means that investors are paying more for each unit of net income, making it more expensive to purchase than a stock with a lower PE ratio.

Learn more about trading stocks based on P/E.

MarketRank™ evaluates a company based on dividend strength, earnings, valuation, analysts forecasts, and more.
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Media sentiment refers to the percentage of positive news stories versus negative news stories a company has received in the past week.
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Analyst consensus is the average investment recommendation among Wall Street research analysts.
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Analyst ConsensusUpgrade to All Access to use the All Ratings Filter
CompanyCurrent PricePE RatioMarket CapVolumeAverage VolumeIndicator(s)
Nevro Corp. stock logo
NVRO
Nevro
$19.08
-0.7%
1,909.91$689.17 million100,939568,740
Kura Sushi USA, Inc. stock logo
KRUS
Kura Sushi USA
$66.00
-0.2%
1,650.41$733.26 million59,371150,917
Utz Brands, Inc. stock logo
UTZ
Utz Brands
$13.44
+0.1%
1,344.00$1.89 billion269,367475,848Analyst Report
Amedisys, Inc. stock logo
AMED
Amedisys
$93.67
+0.3%
1,338.33$3.06 billion110,311514,881Analyst Report
Short Interest ↑
Focus Financial Partners Inc. stock logo
FOCS
Focus Financial Partners
$52.99
0.0%
1,059.80$4.16 billion6.82 million963,872High Trading Volume
NerdWallet, Inc. stock logo
NRDS
NerdWallet
$9.03
+1.6%
903.90$700.19 million81,329538,368Short Interest ↓
Hagerty, Inc. stock logo
HGTY
Hagerty
$8.07
-1.2%
807.00$2.71 billion22,88198,804Short Interest ↓
Boston Omaha Co. stock logo
BOC
Boston Omaha
$15.87
-3.2%
793.90$496.89 million67,437126,344
NextGen Healthcare, Inc. stock logo
NXGN
NextGen Healthcare
$23.74
+0.0%
791.33$1.59 billion279,425630,245Analyst Report
Short Interest ↑
USA Compression Partners LP stock logo
USAC
USA Compression Partners
$23.35
-2.1%
778.33$2.29 billion142,331169,227Analyst Downgrade
Analyst Revision
Brookfield Business Partners L.P. stock logo
BBU
Brookfield Business Partners
$14.47
-4.8%
723.86$1.08 billion5,33912,096
Las Vegas Sands Corp. stock logo
LVS
Las Vegas Sands
$45.47
-0.8%
649.57$34.76 billion2.33 million4.57 million
Colliers International Group Inc. stock logo
CIGI
Colliers International Group
$93.15
-2.2%
621.00$4.27 billion48,04898,036Short Interest ↑
Sterling Check Corp. stock logo
STER
Sterling Check
$12.69
+0.6%
634.50$1.22 billion113,939264,399
NexPoint Real Estate Finance, Inc. stock logo
NREF
NexPoint Real Estate Finance
$16.00
-2.2%
533.33$275.68 million23,57642,960Short Interest ↑
Gap Down
L Catterton Asia Acquisition Corp stock logo
LCAA
L Catterton Asia Acquisition
$10.67
533.77$308.90 million5,229383,036Positive News
J.W. Mays, Inc. stock logo
MAYS
J.W. Mays
$46.51
516.78$93.95 million587747Short Interest ↑
Quipt Home Medical Corp. stock logo
QIPT
Quipt Home Medical
$5.05
-0.8%
505.00$212.61 million24,909192,550
MSA Safety Incorporated stock logo
MSA
MSA Safety
$155.21
-1.5%
485.03$6.10 billion23,786131,343Positive News
HealthEquity, Inc. stock logo
HQY
HealthEquity
$74.44
+1.9%
496.27$6.37 billion192,093655,816Insider Selling
Corsair Gaming, Inc. stock logo
CRSR
Corsair Gaming
$14.25
-1.9%
475.16$1.46 billion86,932419,952Short Interest ↓
Tactile Systems Technology, Inc. stock logo
TCMD
Tactile Systems Technology
$13.90
-1.1%
463.33$326.09 million124,908287,625Gap Up
Sprinklr, Inc. stock logo
CXM
Sprinklr
$13.90
+0.4%
463.49$3.76 billion671,1461.38 millionShort Interest ↓
Kelly Services, Inc. stock logo
KELYA
Kelly Services
$18.25
+0.3%
456.36$646.05 million30,449174,215Short Interest ↑
Morningstar, Inc. stock logo
MORN
Morningstar
$229.58
-2.0%
433.18$9.79 billion37,829182,762
TPG Inc. stock logo
TPG
TPG
$29.37
-2.5%
419.57$9.08 billion93,921521,221
InvenTrust Properties Corp. stock logo
IVT
InvenTrust Properties
$23.30
-2.1%
388.40$1.57 billion60,614226,768
Molson Coors Beverage stock logo
TAP
Molson Coors Beverage
$62.26
-2.1%
389.13$13.46 billion540,1841.91 millionPositive News
Nu Holdings Ltd. stock logo
NU
NU
$7.06
-2.6%
353.18$33.15 billion9.14 million26.20 million
Welltower Inc. stock logo
WELL
Welltower
$81.22
-0.9%
353.15$42.13 billion2.55 million2.24 millionPositive News
OrthoPediatrics Corp. stock logo
KIDS
OrthoPediatrics
$31.63
-1.2%
351.44$738.56 million111,281100,159Positive News
Quaker Chemical Co. stock logo
KWR
Quaker Chemical
$156.62
-2.1%
333.23$2.82 billion8,05889,958
Brookfield Co. stock logo
BN
Brookfield
$30.09
-3.8%
334.37$49.29 billion2.73 million2.41 millionShort Interest ↓
Positive News
eXp World Holdings, Inc. stock logo
EXPI
eXp World
$15.45
-4.9%
309.06$2.37 billion490,9551.06 millionOptions Volume
Blue Owl Capital Inc. stock logo
OWL
Blue Owl Capital
$12.80
-1.2%
320.08$18.01 billion2.41 million3.69 million
Agiliti, Inc. stock logo
AGTI
Agiliti
$6.33
-2.5%
316.66$854.93 million126,133282,855News Coverage
Penumbra, Inc. stock logo
PEN
Penumbra
$236.68
-2.2%
319.84$9.10 billion91,324354,788Positive News
Mesa Laboratories, Inc. stock logo
MLAB
Mesa Laboratories
$99.79
-5.0%
302.40$536.87 million10,64648,162Positive News
The Trade Desk, Inc. stock logo
TTD
Trade Desk
$78.00
-0.2%
300.01$38.24 billion1.16 million4.15 million
NSTS Bancorp, Inc. stock logo
NSTS
NSTS Bancorp
$8.99
-0.7%
299.77$49.45 million7536,814News Coverage
Precision Optics Co., Inc. stock logo
POCI
Precision Optics
$5.97
+0.3%
298.65$36.24 million9917,936Gap Up
Criteo S.A. stock logo
CRTO
Criteo
$29.04
-0.5%
290.40$1.62 billion31,292234,120
Goosehead Insurance, Inc stock logo
GSHD
Goosehead Insurance
$73.16
-1.8%
281.40$1.75 billion104,204260,969Analyst Report
Short Interest ↑
Natural Health Trends Corp. stock logo
NHTC
Natural Health Trends
$5.33
+0.6%
266.63$61.40 million1,21019,757Positive News
Cameco Co. stock logo
CCJ
Cameco
$37.64
-5.0%
250.93$16.33 billion5.72 million4.39 millionAnalyst Report
Analyst Revision
News Coverage
Sono-Tek Co. stock logo
SOTK
Sono-Tek
$5.18
-0.8%
259.13$81.53 million1,9246,280
Genesis Energy, L.P. stock logo
GEL
Genesis Energy
$10.31
-0.1%
257.75$1.26 billion228,728473,903Short Interest ↑
Willdan Group, Inc. stock logo
WLDN
Willdan Group
$20.07
-1.8%
250.91$272.85 million4,85643,277
MakeMyTrip Limited stock logo
MMYT
MakeMyTrip
$40.00
-1.3%
250.02$4.25 billion170,075424,798Positive News
Modiv Industrial, Inc. stock logo
MDV
Modiv Industrial
$15.01
-10.1%
250.21$113.18 million27,38515,822Positive News
Gap Down
Natural Gas Services Group, Inc. stock logo
NGS
Natural Gas Services Group
$14.06
-3.4%
242.67$174.91 million38,45147,828
IMAX Co. stock logo
IMAX
IMAX
$19.52
+1.0%
244.03$1.07 billion251,526549,721
Ventas, Inc. stock logo
VTR
Ventas
$41.34
-1.9%
217.59$16.63 billion692,5822.22 millionEx-Dividend
Positive News
The AZEK Company Inc. stock logo
AZEK
AZEK
$29.30
-1.5%
209.29$4.38 billion936,3961.69 million
Universal Technical Institute, Inc. stock logo
UTI
Universal Technical Institute
$8.34
-0.5%
208.55$284.14 million12,345107,883Positive News
Payoneer Global Inc. stock logo
PAYO
Payoneer Global
$6.16
+0.7%
205.33$2.21 billion828,6553.14 million
PubMatic, Inc. stock logo
PUBM
PubMatic
$11.79
-2.6%
196.53$611.55 million134,316440,136Short Interest ↓
News Coverage
ADT Inc. stock logo
ADT
ADT
$6.01
+0.2%
200.33$5.54 billion554,4282.78 millionShort Interest ↑
Stericycle, Inc. stock logo
SRCL
Stericycle
$42.95
-3.9%
186.75$3.97 billion269,746434,667
Atlantic American Co. stock logo
AAME
Atlantic American
$1.85
-4.1%
185.00$37.74 million8,1945,086Analyst Report
Short Interest ↑
Gap Down
Insulet Co. stock logo
PODD
Insulet
$164.40
+3.1%
184.72$11.48 billion728,747825,996Analyst Report
Short Interest ↓
News Coverage
Gap Up
On Holding AG stock logo
ONON
ON
$25.90
-6.9%
185.00$16.25 billion3.62 million4.13 million
Palo Alto Networks, Inc. stock logo
PANW
Palo Alto Networks
$235.45
+0.4%
186.87$72.66 billion1.38 million4.74 millionAnalyst Report
Positive News
Docebo Inc. stock logo
DCBO
Docebo
$38.96
-3.8%
177.09$1.25 billion7,12940,828Positive News
GoodRx Holdings, Inc. stock logo
GDRX
GoodRx
$5.52
-2.0%
184.06$2.20 billion189,3441.62 million
Kite Realty Group Trust stock logo
KRG
Kite Realty Group Trust
$21.00
-2.0%
175.01$4.61 billion390,0161.47 millionShort Interest ↓
News Coverage
Positive News
STERIS plc stock logo
STE
STERIS
$214.79
-2.1%
176.06$21.22 billion99,883445,436
RXO, Inc. stock logo
RXO
RXO
$19.16
-2.9%
174.20$2.24 billion444,4761.11 millionShort Interest ↑
Credit Suisse X-Links Gold Shares Covered Call ETN stock logo
GLDI
Credit Suisse X-Links Gold Shares Covered Call ETN
$132.38
-1.2%
169.77$52.95 million11,0044,290Positive News
High Trading Volume
BioMarin Pharmaceutical Inc. stock logo
BMRN
BioMarin Pharmaceutical
$86.17
-2.6%
165.71$16.22 billion365,4351.30 millionShort Interest ↑
American Resources Co. stock logo
AREC
American Resources
$1.59
-4.8%
159.00$124.35 million168,502229,422Short Interest ↓
News Coverage
Positive News
Lantheus Holdings, Inc. stock logo
LNTH
Lantheus
$66.66
-4.1%
162.59$4.56 billion262,8651.02 millionAnalyst Downgrade
News Coverage
Chewy, Inc. stock logo
CHWY
Chewy
$18.46
+1.1%
167.83$7.94 billion3.46 million4.73 million
N-able, Inc. stock logo
NABL
N-able
$12.96
+0.5%
162.02$2.37 billion243,939537,707Short Interest ↓
News Coverage
Positive News
Zoom Video Communications, Inc. stock logo
ZM
Zoom Video Communications
$69.69
-0.4%
158.39$20.97 billion1.13 million3.85 millionPositive News
Entegris, Inc. stock logo
ENTG
Entegris
$93.45
-0.5%
155.75$14.03 billion382,0171.48 millionNews Coverage
Positive News
NETSTREIT Corp. stock logo
NTST
NETSTREIT
$15.18
-2.6%
151.80$1.02 billion407,829668,048Short Interest ↓
Gentherm Incorporated stock logo
THRM
Gentherm
$54.07
-0.4%
154.49$1.78 billion22,238160,442
Li Auto Inc. stock logo
LI
Li Auto
$35.23
-1.2%
153.17$34.65 billion2.07 million7.09 millionShort Interest ↓
Agilysys, Inc. stock logo
AGYS
Agilysys
$66.00
-0.2%
153.49$1.67 billion22,395151,492Short Interest ↓
News Coverage
Positive News
Reservoir Media, Inc. stock logo
RSVR
Reservoir Media
$6.06
-0.7%
151.54$392.14 million4,073106,079Analyst Revision
EngageSmart, Inc. stock logo
ESMT
EngageSmart
$18.43
+2.4%
153.60$3.08 billion467,282520,882Short Interest ↓
News Coverage
Axon Enterprise, Inc. stock logo
AXON
Axon Enterprise
$196.77
-1.1%
146.84$14.71 billion141,291849,440Analyst Report
Positive News
AppLovin Co. stock logo
APP
AppLovin
$40.52
+1.4%
675.45$14.09 billion462,9212.87 million
StepStone Group LP stock logo
STEP
StepStone Group
$30.76
-2.6%
146.48$3.36 billion185,889283,193
RADCOM Ltd. stock logo
RDCM
RADCOM
$8.70
+0.1%
145.00$128.24 million1,12811,122Analyst Report
News Coverage
PDF Solutions, Inc. stock logo
PDFS
PDF Solutions
$32.02
-1.2%
139.22$1.22 billion50,159173,430
Kanzhun Limited stock logo
BZ
Kanzhun
$15.53
+2.4%
141.19$5.83 billion606,9772.91 millionGap Down
Inter & Co, Inc. stock logo
INTR
Inter & Co, Inc.
$3.78
-5.5%
126.04$1.52 billion155,245311,396News Coverage
Positive News
Atlantica Sustainable Infrastructure plc stock logo
AY
Atlantica Sustainable Infrastructure
$18.12
-5.1%
129.43$2.04 billion400,339600,091Short Interest ↑
Bristow Group Inc. stock logo
VTOL
Bristow Group
$27.40
-2.7%
124.55$772.13 million56,210115,970Positive News
Salesforce, Inc. stock logo
CRM
Salesforce
$203.29
+0.3%
127.86$197.80 billion1.88 million6.86 millionInsider Selling
Box, Inc. stock logo
BOX
BOX
$24.44
+1.0%
128.64$3.52 billion550,0261.52 millionShort Interest ↓
Compass Minerals International, Inc. stock logo
CMP
Compass Minerals International
$27.10
-3.0%
123.18$1.12 billion123,747347,769
Lazydays Holdings, Inc. stock logo
LAZY
Lazydays
$7.62
+0.3%
127.00$106.07 million25,00392,484Short Interest ↑
Research Solutions, Inc. stock logo
RSSS
Research Solutions
$2.44
-2.4%
122.06$72.22 million9,03526,455Gap Down
First Trust California Municipal High Income ETF stock logo
FCAL
First Trust California Municipal High Income ETF
$47.16
-0.2%
124.11$143.84 million11,03116,326Positive News
Certara, Inc. stock logo
CERT
Certara
$14.26
-1.9%
118.84$2.28 billion231,3921.09 millionShort Interest ↓
News Coverage
Positive News
Interface, Inc. stock logo
TILE
Interface
$9.68
-1.3%
121.00$562.51 million82,656367,306Short Interest ↓
Positive News
Catalyst Bancorp, Inc. stock logo
CLST
Catalyst Bancorp
$12.06
+5.9%
120.60$59.22 million8,7008,606Short Interest ↑
Comparing and Trading High PE Ratio Stocks

This page contains a list of the companies with the highest P/E ratios. Alternatively, users can sort stocks by the lowest P/E ratios by clicking on the table item menu.

With an All Access MarketBeat subscription, it’s possible to filter this list by MarketRank, media sentiment, and analyst consensus. 

Regular users can filter it by country, sector, and market cap.

Consider this table a birds-eye view of how companies are evaluated compared to their price to earnings, which may help you spot potentially under and over-valued opportunities.

The price-to-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings. The price-to-earnings ratio is also sometimes known as the price multiple or the earnings multiple. The P/E ratio is just one way to measure a stock, but it's a very popular one. 

Many investors use the P/E ratio as a way to compare companies within the same industry quickly. The higher the P/E ratio, the more expensive the stock is relative to its earnings. The P/E ratio can be calculated for any company that has stock that trades on a public exchange. All you need is the current share price and the company's most recent earnings per share (EPS) number. The EPS number can be found on the company's income statement. 

Here's the formula for the P/E ratio: P/E Ratio = Share Price ÷ Earnings per Share (EPS) For example, let's say Company XYZ is trading at $50 per share, and it reported EPS of $5 last quarter. Company XYZ's P/E ratio would be 10 (($50 ÷ $5) = 10).

A higher P/E ratio means that investors pay more for each dollar of earnings. A lower P/E ratio means that investors pay less for each dollar of earnings. 

The P/E ratio doesn't tell you the whole story, though. A company with a high P/E ratio might be expected to grow its earnings faster than a company with a low P/E ratio. 

A company with a low P/E ratio might be in a declining industry or simply be a value stock trading at a discount to its intrinsic value. The P/E ratio is just one metric that should be considered when valuing a stock. Looking at a company's financial statements, business model, competitive advantages, and growth prospects is important before making an investment decision.

P/E ratios can also be used to compare the valuations of different companies. For example, if Company A has a P/E ratio of 20 and Company B has a P/E ratio of 10, it may be because Company A is seen as being more valuable than Company B. 

While there is no perfect ratio, certain ratios work well with the P/E ratio to provide a more complete picture of a company's valuation. 

The first ratio is the price-to-earnings growth (PEG) ratio. This ratio measures the P/E ratio of the company's earnings growth rate. A lower PEG ratio indicates that the stock is undervalued with its earnings growth. 

The second ratio is the enterprise value to EBITDA (EV/EBITDA) ratio. This ratio measures the value of a company's enterprise (the market value of its equity plus the value of its debt) concerning its EBITDA (earnings before interest, taxes, depreciation, and amortization). 

The third ratio is the price-to-book (P/B) ratio. This ratio measures the market price of a stock in relation to the company's book value (the value of its assets minus its liabilities). 

The fourth ratio is the price to sales (P/S) ratio. This ratio measures the market price of stock about the company's sales. 

The fifth ratio is the dividend yield. This ratio measures the annual dividend paid by a company concerning its stock price. 

While no single ratio can tell you everything you need to know about a stock, these five ratios can give you a better idea of whether a stock is undervalued or overvalued.

Earnings are just one part of the story regarding investing in stocks. Here are some more things to consider:

  1. Revenue and earnings growth: A company's share price will eventually follow its earnings growth. Therefore, looking at a company's revenue and earnings growth over time is important to get an idea of where the stock price might be headed.
  1. Profit margins: A company's profit margin is a good indicator of its competitiveness and efficiency.
  1. Debt levels: A company with a large amount of debt may be at risk of defaulting on its loans, which could trigger a sharp decline in its stock price.
  1. Cash flow: A company's ability to generate cash flow is important because it indicates its ability to pay its bills and reinvest in its business.
  1. Analyst ratings: Analyst ratings can give you an idea of where a particular stock might be headed.

The following are some of the most common mistakes made when using the P/E ratio:

  1. Ignoring the difference between trailing and forward P/E ratios

One of the most common mistakes when using the P/E ratio is comparing apples to oranges, i.e., comparing a trailing P/E ratio with a forward P/E ratio.

A trailing P/E ratio is based on historical earnings and is more reflective of a company's past performance. In contrast, a forward P/E ratio is based on estimated earnings and is, therefore, more indicative of a company's future prospects.

  1. Failing to adjust for differences in earnings

Another common mistake made when using the P/E ratio is failing to adjust for differences in earnings. For example, a company that is reporting higher earnings due to one-time items, such as the sale of a subsidiary, should not be compared with a company that is reporting more sustainable earnings growth.

  1. Comparing P/E ratios across different industries

Another mistake often made when using the P/E ratio is to compare P/E ratios across different industries. This is not an apples-to-apples comparison because different industries have different characteristics and growth prospects.

  1. Failing to consider the impact of share repurchases

Another mistake made when using the P/E ratio is to fail to consider the impact of share repurchases. When a company repurchases its own shares, it reduces the number of outstanding shares, which raises the earnings per share (EPS).

This means that a company with a high P/E ratio may not be as overvalued as it appears if it has been actively repurchasing its own shares.

  1. Failing to consider the impact of dilution

Another mistake made when using the P/E ratio is failing to consider the impact of dilution. Dilution can occur when a company issues new shares, or when existing shareholders convert their shares into new shares.

This increases the number of shares outstanding and, all else being equal, reduces EPS. This means that a company with a low P/E ratio may be more overvalued than it appears if it has been diluting its shareholders.

Despite the ratio’s usefulness, there are a few potential problems with using the P/E ratio as a primary investment metric: 

1) The P/E ratio does not consider the company's debt situation. A company with a high P/E ratio but a large amount of debt may be a riskier investment than a company with a lower P/E ratio but no debt. 

2) The P/E ratio does not consider the company's cash position. A company with a high P/E ratio but a large amount of cash may be a safer investment than a company with a lower P/E ratio but no cash. 

3) The P/E ratio is a backward-looking metric. It only tells us how much investors have been willing to pay for a company's earnings in the past. It does not necessarily indicate how much they will be willing to pay in the future. 

4) The P/E ratio can be manipulated by management. For example, a company might choose to sell off a division that is not performing well to boost its P/E ratio. 

5) The P/E ratio is affected by accounting choices. For example, a company might recognize revenue when a product is shipped, even if the customer has not yet paid, to boost its P/E ratio. 

6) The P/E ratio does not take into account the company's growth prospects. A company with a high P/E ratio but poor growth prospects may be riskier than a company with a lower P/E ratio but strong growth prospects. 

7) The P/E ratio is affected by the overall market conditions. For example, when the overall market is doing well, companies with high P/E ratios may be seen as more attractive investments than when the market is doing poorly. 

8) The P/E ratio is affected by earnings variability. For example, a company with a high P/E ratio but volatile earnings may be a riskier investment than a company with a lower P/E ratio but more stable earnings.

While earnings are a good indicator of a company's profitability, they can be manipulated by management through accounting techniques. As a result, the P/E ratio may not always accurately measure a company's stock price.

There are a number of ways that earnings can be manipulated. For example, companies can choose to recognize revenue when it is earned, rather than when it is received. This can artificially inflate earnings in the short term and make the P/E ratio look better than it would otherwise. Companies can also choose to defer expenses, which has the opposite effect.

In addition, companies can use accounting techniques to smooth earnings. This can make earnings look more consistent from one period to the next, even if the underlying business is not actually doing well. This can make the P/E ratio look artificially low.


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