Price/earnings ratio (P/E)

used in fundamental analysis, it a ratio calculated by dividing a stock's current market price by its after-tax earnings per share, generally over the last 12-month period. This ratio is sometimes called the stock's "multiple," and is commonly used as a relative measure of how expensive a stock is in comparison to another stock, other stocks in an industry group, or to the overall market. Also termed Trailing P/E. See also Forward P/E.