VineLesson 72 · Written for kid, teen, and little
The P/E ratio
A simple number that says how much investors pay per $1 of profit.
How do you tell if a stock is cheap or pricey? One quick tool is the P/E ratio: the stock's price divided by how much profit it makes per share. It tells you how much you're paying for each $1 of the company's yearly profit. A high P/E means investors expect big growth; a low one can mean a bargain — or a warning. 🧮
Words to know
4P/E ratio
Price ÷ earnings per share — how much you pay for each $1 of a company's yearly profit.
Earnings per share (EPS)
A company's profit divided by its number of shares.
Forward P/E
A P/E based on expected NEXT-year earnings instead of past ones.
Value trap
A stock that looks cheap by P/E but is actually cheap because the business is in trouble.
Match each P/E range to what it usually means.
0 / 5 matched
In the full lesson
- 1Match the pairs
Vine has 107 lessons like this one, each written three ways so a 7-year-old and a 17-year-old both get a version that fits.
The practice portfolio is open.
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