P/E Ratio (Price to Earnings) - Current

A stock's current price divided by the company's trailing 12-month earnings per share.

Benefit

By looking at the five-year average P/E alongside the current P/E, you can quickly tell whether a company is currently valued above or below its average P/E.

Origin

The company’s price is received from ComStock, a division of Interactive Data Corporation. The company’s earnings are found in the most recent annual report and 10-Q statement. Total shares outstanding is taken from the most recent 10-K forms.

For the Pros

Use the following formula to look for companies that trade at a discount to their historical valuations. The same equation can be used with Price/Book, Price/Sales and Price/Cash Flow:

PE Current / PE 5-Year Average