Ep 59: What is P/E Ratio and Stock Valuation?

How do you know if a stock is "on sale" or expensive to buy right now? In this Market MakeHer podcast episode, we're going to learn all about stock valuation and how to look at the Price to Earnings Ratio to make informed investing decisions.
 
We discuss how to determine if a stock is overpriced or underpriced, the significance of earnings potential, and the role of analysts in shaping market perceptions.

🔮 P/E Ratio Demystified
"P/E ratio is just the price divided by earnings." We teach you the math and give you examples to make it make sense, but feel free to ask us a question!

🧟‍♀️🧠 Takeaways

• Price alone does not determine if a stock is expensive.
• Understanding PE ratios is crucial for stock picking.
• PE ratio is calculated by dividing price by earnings.
• Market perception influences stock prices significantly.
• Higher PE ratios indicate higher earnings potential.
• Comparing stocks to their sector is essential for valuation.
• Analysts' earnings estimates can affect stock prices.
• Investors should consider both past and future earnings.
• Self-directed investors need to stay informed about market trends.
• Diversification is key in investment strategies.