What a P/E ratio tells you, and what it hides

Published 2026-11-02. Every figure comes from the filings and prices saved here.

The sum

P/E is the share price divided by earnings per share.

The two shares cost about the same. Yet buyers paid about 46 times a year's profit for Apple and about 17 times for JPMorgan. A share price alone tells you nothing about whether a share is cheap.

What a high or low number means

A high P/E can mean buyers expect profits to grow. It can mean they see the profits as safer. It can also mean they are too hopeful.

A low P/E can mean buyers expect slow growth or more risk. It can also mean they have overlooked something good.

The number cannot tell you which of these is true. It only tells you what people are paying today.

Four ways it misleads

1. One-off items. Apple's earnings per share were $6.08 in fiscal 2024, a year with an unusually large tax bill, and $7.46 in fiscal 2025. At the same price, that is a P/E of 56.7 or 46.2. The income statement lesson shows why.
2. Old earnings. Apple's year ended in September 2025, more than a year before that price. Some sites use next year's forecast instead. A forecast is a guess, not a filed figure.
3. Losses. A company with no profit has no meaningful P/E. It may still be worth a lot, or nothing.
4. Peak profits. Companies in boom-and-bust industries often look cheapest when their profits are at their highest, just before those profits fall.

How to use it

Treat a P/E as a question, not an answer. Why are people paying this much? Is that more than they paid in the past? Is it more than they pay for similar companies? Then go and read the filing.

No single ratio tells you what to buy.

Check it yourself

Every P/E rests on a figure from a filing, so check that first. Check "JPMorgan earned $20.02 per share in fiscal 2025".