A guide to investing's most popular number – the p/e ratio

Successful investing is all about finding the best stocks for the lowest price. The price/earnings (p/e) ratio can reveal when a share is a bargain and when it's overpriced. But what is it and exactly what can it tell you?

Successful investing is all about finding the best stocks for the lowest price. Although something as complex as a business can never be reduced to just one 'magic' number, the price-to-earnings (p/e) ratio can reveal when a share is a bargain and when it's overpriced. So it's a great place to start your hunt. But what is it and exactly what can it tell you?

However, there are drawbacks; conventional p/es can let you down in four ways.

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