When calculating, the stock price usually takes the latest closing price, and if EPS is calculated according to the published EPS of the previous year, it is called historical price-earnings ratio; Generally, consistent estimation is used to calculate EPS estimated P/E ratio, that is, the estimated average or median value obtained by the institutions that track the company's performance after collecting the forecasts of many analysts. What is a reasonable price-earnings ratio, there is no certain standard.

P/E ratio is the ratio of share price to earnings per share. The price-earnings ratio widely discussed in the market usually refers to the static price-earnings ratio, which is usually used as an indicator to compare whether stocks with different prices are overvalued or undervalued. It is not always accurate to measure the texture of a company's stock with price-earnings ratio.

It is generally believed that if the price-earnings ratio of a company's stock is too high, then the price of the stock is in a bubble and its value is overvalued. When a company grows rapidly and its future performance is promising, when comparing the investment value of different stocks with P/E ratio, these stocks must belong to the same industry, because the company's earnings per share are close and the comparison is effective.

Extended data:

In the international market, the most typical way to examine the investment value of a stock is not the price-earnings ratio, but the price-earnings ratio/growth rate as the standard. Generally speaking, as long as the price-earnings ratio/growth rate

In another algorithm, because the interest rate is around 3%, that is, 33 times the P/E ratio means matching the interest rate level, a 50% growth rate will make a stock with 50 times the P/E ratio become 33 times a year later. Therefore, this also disproves the rationality of the 50 times P/E ratio of China Stock Exchange.

Reference source Baidu Encyclopedia-P/E ratio