Reading the Price Tag: P/E and EPS
A stock's price alone tells you almost nothing about whether it's 'expensive' - you need to compare it to earnings.
Earnings Per Share (EPS) is a company's total profit divided by its shares outstanding - the per-share slice of what the business actually earned.
The P/E ratio divides price by EPS. Roughly, it answers: 'how many years of current profit would it take to pay back this stock price?' A P/E of 15 is a very different bet than a P/E of 80.
A high P/E isn't automatically bad - it often means the market expects strong future growth. A low P/E isn't automatically a bargain - it can mean the market expects trouble ahead. Context (the industry, the growth rate, the trend) always matters more than the raw number alone.
Open AAPL's Financials panel and hover the P/E and EPS tiles - each has a plain-English tooltip explaining exactly what that number means for this specific company right now.
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