# Price to earning (P/E) ratio & what it means?

**If** there is one number that people look at than more any other number, it is the â€œPrice to Earning Ratio (P/E)â€. The P/E is a ratio that investors throw around with confidence as if it told the complete story. Of course, it doesn’t tell the whole story (if it did, we wouldn’t need all the other numbers.) The P/E looks at the relationship between the stock price and the company’s earnings.

P/E = Stock Price / EPS

**What does P/E tell you?**

In conclusion, the P/E tells you what the market thinks of a stock. It tells you whether the market likes or dislikes the stock. If things are vague and unclear to you, do not worry. The next ratio will make everything you read till now make sense.