P/E (Price-to-Earnings) ratio
Contents
Key points
- It compares a company’s market value with its trailing four-quarter (annualised) net profit and tells you how many years of current profit you are paying for.
- A low P/E suggests profit is cheap relative to price, while a high P/E suggests the market expects strong profit growth or that the share is expensive.
- when net profit is negative the P/E cannot be computed and is meaningless.
Formula / calculation
P/E = Share price / Earnings per share, or equivalently Market capitalisation / Annualised net profit. Annualised profit is the sum of the last four quarters disclosed to KAP; because the price changes daily, the ratio is refreshed daily as well.
Live example
- P/E ratio
- 3.58
- THYAO
- Last price
- 290.75 TL
- Daily change
- 0.00%
- Market cap
- TRY 401.2B
Interpretation
A low P/E suggests profit is cheap relative to price, while a high P/E suggests the market expects strong profit growth or that the share is expensive. The ratio should never be read alone but compared with peers in the same sector and with the BIST average.
Pitfalls
when net profit is negative the P/E cannot be computed and is meaningless. One-off gains (asset sales, FX gains) inflate profit and artificially depress the ratio. In high-inflation periods nominal profit growth can make the ratio look deceptively low. Use it together with P/B, EV/EBITDA and dividend yield.
Low P/E Stocks
| Stock | P/E | Daily |
|---|---|---|
1. EUHOLEuro Yatirim Holding | 0.86 | 0.00% |
2. ATEKSAkin Tekstil | 1.01 | 0.00% |
3. TERATera Yatirim Menkul Degerler | 1.03 | 0.00% |
4. ASGYOAsce GMYO | 1.04 | 0.00% |
5. ALBRKAlbaraka Türk | 1.11 | 0.00% |
6. HLGYOHalk GMYO | 1.15 | 0.00% |
7. IHLGMIhlas Gayrimenkul | 1.38 | 0.00% |
8. INFOInfo Yatirim | 1.46 | 0.00% |
9. HDFGSHedef Girişim | 1.49 | 0.00% |
10. CRDFACreditwest Faktoring | 1.55 | 0.00% |
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Frequently asked questions
What is P/E (Price-to-Earnings) ratio?
The P/E ratio divides the share price by annual earnings per share and shows how many units of price an investor pays for one unit of profit.
How is P/E (Price-to-Earnings) ratio calculated?
P/E = Share price / Earnings per share, or equivalently Market capitalisation / Annualised net profit. Annualised profit is the sum of the last four quarters disclosed to KAP; because the price changes daily, the ratio is refreshed daily as well.
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