Will the Real P/E Please Stand Up?

Will The Real P/E Please Stand Up? Splash image
In the world of investing, no one piece of financial information tells all. But the price-earnings ratio comes close, containing a wealth of information about the market's expectations for earnings growth.

However, if you look through any investment information resource commonly used by individual investors, you'll find numerous definitions of the term. Because the price-earnings ratio is a powerful summary of market opinion, financial analysts have frequently fiddled with it, producing what may appear to be endless variations on a theme.

Sorting out the different ways price-earnings ratios are quoted and how each different price-earnings ratio technique can be applied and interpreted should aid in your stock selection decisions.

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