valuation term

Price-to-Earnings Ratio

A valuation multiple that compares a company’s share price with the earnings generated per share.

Category

valuation

Applies to

Companies, Indices, Sectors

Related sectors

5

Linked companies

13

Why it matters

Investor context

It gives a fast read on how expensive a stock looks relative to current or expected profit generation.

Formula

Calculation pattern

share price ÷ earnings per share

Sector context

Sectors where this term is common

Issuer examples

Companies using this lens

Alphabet Inc.

Companies

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A global internet platform company spanning search, advertising, cloud, YouTube, and frontier bets, with strong operating leverage across digital ecosystems.

Apple Inc.

Companies

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A global consumer-technology company spanning hardware, software, services, and wearables, with one of the strongest cash-flow profiles in public markets.

AstraZeneca PLC

Companies

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A global biopharmaceutical company focused on oncology, cardiovascular, renal, respiratory, immunology, and rare disease therapies.

Honeywell International Inc.

Companies

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A diversified industrial and automation company with significant exposure to aerospace, building technologies, materials, and productivity solutions.

Infosys Limited

Companies

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A global IT services and consulting company with meaningful exposure to enterprise modernization, outsourcing, and digital transformation spending.

JPMorgan Chase & Co.

Companies

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A globally systemically important bank with leading franchises in consumer banking, investment banking, markets, and asset and wealth management.

LVMH Moët Hennessy Louis Vuitton

Companies

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The world’s largest luxury goods group, spanning fashion, leather goods, jewelry, cosmetics, wines, and spirits.

Microsoft Corporation

Companies

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A diversified software and cloud platform leader with durable enterprise franchises, large recurring revenue streams, and significant AI infrastructure leverage.

NVIDIA Corporation

Companies

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A leading accelerated-computing and semiconductor platform company benefiting from data-center AI demand and high-margin GPU ecosystems.

Sanofi

Companies

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A global pharmaceutical company with scale in specialty care, vaccines, and general medicines across mature and emerging markets.

Sony Group Corporation

Companies

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A diversified entertainment, gaming, music, image-sensor, and electronics company with multiple premium brand ecosystems.

Tencent Holdings Limited

Companies

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A major internet platform with exposure to social media, gaming, fintech, cloud, and digital content ecosystems.

Toyota Motor Corporation

Companies

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A global automotive leader with scale advantages in manufacturing, hybrids, and balance-sheet resilience across industry cycles.

Market context

Markets where this concept shows up

Benchmark context

Indices where the concept matters