Talk:Price–earnings ratio/Archives/2020

Unclear about interpretation
"A company with a low PER indicates that the market perceives it as higher risk or lower growth or both as compared to a company with a higher PER."

Doesn't a low PER mean that it takes only few years for a company to earn enough money to pay back its market price? I would associate that with lower rather than higher risk. The longer you would have to sustain the current level of earnings to achieve this, the higher the risk that you won't, because something unforseen happens.

Adelequested (talk) 14:01, 28 April 2020 (UTC)

Never mind, I got it. A high PER means that investors are prepared to wait for a long time to make back their investment, because they're optimistic that the level of earnings can be sustained over a long period, because they think the industry is not risky.

Adelequested (talk) 14:24, 28 April 2020 (UTC)

Application
When should we use P/E ratio or P/B, P/S, EV/EBITDA to evaluate a stock price? Jiayu Xu (talk) 08:39, 20 June 2020 (UTC)