Ask a Fool: What is the P/E Ratio?

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The P/E ratio, or price-to-earnings ratio, is one of the most watched and also most misunderstood metrics out there for investors. In the following video, Fool.com analyst Austin Smith explains the ins and outs of calculating and interpreting a P/E ratio. First, our Foolish analyst considers that the median stock in the S&P 500(SNPINDEX: ^GSPC) has historically had a P/E ratio of about 15. He then zeros in on a few companies' current ratios for closer examination. Watch the video below to learn more.

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The article Ask a Fool: What is the P/E Ratio? originally appeared on Fool.com.

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