What’s the P/E Ratio? 📊

The Price-to-Earnings (P/E) ratio is one of the core metrics used to assess whether a stock is potentially overvalued or undervalued — and it’s more relevant than many think, even in today’s evolving markets.

Here’s the formula:

P/E = Market Price per Share ÷ Earnings per Share (EPS)

🔹 A high P/E might suggest that investors are betting on strong future growth — or it could signal the stock is overpriced.

🔹 A low P/E might hint the stock is undervalued — or that it’s under pressure due to market or company-specific issues.

A few things to keep in mind:

• The P/E ratio doesn’t work for companies with negative or zero earnings.

• It’s most useful when comparing companies within the same industry.

Even in crypto, knowing how to read the P/E ratio can help you evaluate tokenized stocks or Web3 companies entering public markets. Always good to sharpen the fundamentals.