Making the P/E Ratio More Meaningful

Four variables go into judging whether a price-earnings ratio is cheap or expensive.

Charles Rotblut leads a class in AAII’s new Essential Investing Video Course. Go to https://www.aaii.com/ves for more information and to subscribe.

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• Understand how earnings adjustments and analyst estimates affect the reliability of trailing and forward price-earnings (P/E) ratios

• Learn when seemingly cheap or expensive stocks as measured by the price-earnings ratio may be misleading

• Discover how to use benchmarks to judge price-earnings ratios and identify potentially undervalued stocks with the AAII Stock Screens