Interpreting the P/E Ratio

P/E Interpretation Guide

P/EInterpretation
< 10Undervalued or distressed
10 - 20Fairly valued
20 - 30Growth expected
30+Speculative / high growth

Average P/E by Sector

SectorAvg P/E
Technology~25
Utilities~15
Banks~10

Caution

The P/E ratio alone is insufficient to evaluate a stock. Combine it with other metrics: PEG ratio, EV/EBITDA, dividend yield, and revenue growth.