what is pe ratio in share market

The price-to-earnings (P/E) ratio is a measure for valuing a company that compares its current share price to its earnings per share (EPS). It is also known as the price multiple or the earnings multiple. The P/E ratio is calculated by dividing the current stock price by the earnings per share. It is used by investors and analysts to determine the relative value of a company's shares, compare a company against its own historical record, or compare aggregate markets against one another or over time. A high P/E ratio could mean that a company's stock is overvalued, while a low P/E ratio could mean that it is undervalued. The P/E ratio can be estimated on a trailing (backward-looking) or forward (projected) basis