P/E ratio - Know How to Use it to Select Stocks - ICICI Direct- ICICI Direct (2024)

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P/E ratio - Know How to Use it to Select Stocks - ICICI Direct- ICICI Direct (2024)

FAQs

How to pick stocks based on P/E ratio? ›

A low P/E ratio might indicate that the current stock price is low relative to earnings. An investor could look for stocks within an industry that is expected to benefit from the economic cycle and find companies with the lowest P/Es to determine which stocks are the most undervalued.

What is a good P/E ratio for stocks? ›

To give you some sense of what the average for the market is, though, many value investors would refer to 20 to 25 as the average P/E ratio range. And again, like golf, the lower the P/E ratio a company has, the better an investment the metric is saying it is.

What is the PE ratio of Icici? ›

P/E ratio as of June 2024 (TTM): 20.2

According to ICICI Bank's latest financial reports and stock price the company's current price-to-earnings ratio (TTM) is 20.1772. At the end of 2022 the company had a P/E ratio of 19.0.

How to use PE ratio in stock market? ›

Components of P/E ratio

The P/E for a stock is computed by dividing the price of a stock (the "P") by the company's annual earnings per share (the "E"). If a stock is trading at $20 per share and its earnings per share are $1, then the stock has a P/E of 20 ($20/$1).

What is a safe PE ratio for stocks? ›

In simple terms, a good P/E ratio is lower than the average P/E ratio, which is between 20–25. When looking at the P/E ratio alone, the lower it is, the better. For new investors, “P/E” might as well mean “physical education.”

What is a good PE ratio in India? ›

In India, a good PE ratio between 20 to 25 is considered good, suggesting stock is fairly valued, balancing growth potential and investment risk. The Price-to-Earnings (P/E) Ratio is an important metric used by investors to determine the value of a stock in relation to its earnings.

Is 3.5 a good PE ratio? ›

There's no "good" P/E, but 10-20 is usually considered fairly valued. <10 is usually considered undervalued and >20 is usually considered overvalued, though it really depends on the industry. Compare the company to its industry peers to determine if its P/E is fair. 2 comments.

Is 80 PE ratio good? ›

For instance, if the company's relative PE ratio is 80% in comparison to the benchmark PE ratio, it indicates that the absolute ratio is lower than the benchmark. On the contrary, if the relative PE is higher than 100%, the company has outperformed the benchmark index during the specific period.

Which stock has highest PE ratio now? ›

Top P/E Ratio Stocks
  • Adani Green Energy Ltd. The market capitalization of Adani Green Energy Ltd. ...
  • Trent Ltd. The market capitalization of Trent Ltd is 136576.51 crores. ...
  • Adani Total Gas Ltd. ...
  • JBM Auto Ltd. ...
  • Cyient DLM Ltd. ...
  • IFB Industries Ltd. ...
  • Spectrum Electrical Industries Ltd. ...
  • Sadhana Nitro Chem Ltd.

Should I buy stocks with a high PE ratio? ›

Price Earnings (P/E) ratio is one of the most popular ways of valuing a stock. The thumb rule is that a low P/E ratio is a sign of undervaluation while a high P/E ratio is a sign of overvaluation. But such an approach of purely using P/E Ratio to Value a stock is fraught with risks.

Is PE ratio a good indicator? ›

While P/E ratios are not the magical prognostic tool some once thought they were, they can still be valuable when used the properly. Remember to compare P/E ratios within a single industry, and while a particularly high or low ratio may not spell disaster, it is a sign worth taking into consideration.

What is a good PB ratio in India? ›

Conventionally, a PB ratio of below 1.0, is considered indicative of an undervalued stock. Some value investors and financial analysts also consider any value under 3.0 as a good PB ratio.

Does Warren Buffett look at PE ratio? ›

Warren Buffett P/E Ratio Rules

Here are four guidelines for investing using P/E ratios based on Buffett's principles: Look for Value, Not Price: Buffett is a known value investor. A company might have a high or low P/E ratio, but that doesn't necessarily indicate whether it's a good or bad investment.

What is Best Buy PE ratio? ›

As of today (2024-06-10), Best Buy Co's share price is $86.72. Best Buy Co's Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Apr. 2024 was $5.71. Therefore, Best Buy Co's PE Ratio (TTM) for today is 15.19.

What is the PE ratio of Tesla? ›

As of today (2024-06-27), Tesla's share price is $196.37. Tesla's Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Mar. 2024 was $3.92. Therefore, Tesla's PE Ratio (TTM) for today is 50.09.

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