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The price-to-earnings ratio (P/E)
How much you pay for each rial of a company's profit.
P/E = share price ÷ earnings per shareExample: two companies
Company A1.200 ÷ 0.100 = 12
Company B0.800 ÷ 0.040 = 20
B has the lower share price but is more expensive relative to its profit: you pay 20 rials for each rial it earns, against 12 for A.
Compare P/E within the same sector. A low P/E can mean profits are falling; a high one can mean growth is expected.
All content on this site is for educational purposes only and is not investment advice or a recommendation. Past performance does not guarantee future results. Consult a licensed adviser before making any investment decision.