IDEA : P/E Ratio=Earnings per share

$\text{P/E Ratio}=\text{Earnings per share}$

P/E ratios are used by investors and analysts to determine the relative value of a company's shares in an apples-to-apples comparison. It can also be used to compare a company against its own historical record or to compare aggregate markets against one another or over time



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 NIFTY 50 has historically ranged from 28 to 30 . For example, a company with a current P/E of 60, above the Nifty average, trades at 100 times earnings.
A high P/E ratio indicates that investors expect higher earnings. However, a stock with a high P/E ratio is not necessarily a better investment than one with a lower P/E ratio, as a high P/E ratio can indicate that the stock is being overvalued.

when a company's stock has a low P/E ratio, it may indicate that the stock is undervalued. Investors can often buy undervalued stock at a discount and then profit when the price of that stock climbs. That said, sometimes a low P/E ratio reflects a genuine lack of growth potential.

Analysts and investors review a company's P/E ratio when they determine if the share price accurately represents the projected earnings per share. The formula and calculation used for this process follow.$$

$\text{P/E Ratio} = \frac{\text{Market value per share}}{\text{Earnings per share}$

Nifty range PE higher 30 and lower 10, so simply follow the below formula.

WHEN P/E  FOR EARN TO INVEST EARNING % 10 Re.1 Rs.10 10 30 Re. 1 Rs. 30 3

 So invest in market when the Nifty PE is low.

 KEY TAKEAWAYS:

1. The price-earnings ratio (P/E ratio) relates a company's share price to its earnings per share.
2. A high P/E ratio could mean that a company's stock is over-valued, or else that investors are expecting high growth rates in the future which might risk to investor.
3. Companies that have no earnings or that are losing money do not have a P/E ratio since there is nothing to put in the same.

       Stock is Worth Buying

1. Price. The first and most obvious thing to look at with a stock is the price.
2. Revenue Growth. Share prices generally only go up if a company is growing.
3. Earnings Per Share.
4. Dividend and Dividend Yield. 
5. Market Capitalization.
6. Historical Prices Range
7. Analyst Reports.
8. The Industry type.