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Glossary

P/E (price to earnings)

How many reais the market pays today for each real of the company's yearly profit.

What it is

How many reais the market pays today for each real of the company's yearly profit. Shown on the stocks pages.

How Dados B3 calculates it

market value ÷ the year's profit attributable to controlling shareholders (the same as share price ÷ earnings per share). The price used is the first trading day from the day the statements became public at the CVM, not the 31 Dec close.

Example

Illustrative example, with made-up numbers to keep the arithmetic easy: A company is worth R$ 1 billion on the exchange and earned R$ 100 million in the year: P/E = 1,000 ÷ 100 = 10. The market pays R$ 10 for each R$ 1 of yearly profit.

What to watch for when reading it

• A low P/E does not mean a cheap company, nor a high one an expensive one: profit can be one-off (asset sale, accounting gain) or falling.
• Compare within the same sector; different sectors have different typical P/Es.
• Zero or negative profit gives a negative or meaningless P/E: the site publishes it with a negative-P/E mark.
• Above 200 the figure carries an extreme mark: it is almost always tiny profit, not a wrong calculation.
• A dagger (†) next to the P/E warns that the period's profit had one quarter out of line; check the quarterly result.

See also

• Trailing 12-month P/E (TTM)
• P/B (price to book value)
• Earning yield
• EPS (earnings per share)

Methodology · Guide · All indicators

Educational content to understand what each number means. It is not a recommendation to buy or sell.