# what is the difference between price earnings and earnings per share?

7 years ago - 3 answers

Price earnings - A stock's price divided by the company's earnings per share. Generally the lower the P/E, the more dollars earned per dollar you pay for the stock and the cheaper the stock.

Earnings per share - Profit for the financial year divided by the average number of shares in issue during the year.

7 years ago

the big difference is that the P/E is a reflection of future earnings of a company, though EPS is the dividend the company has issued per share. so while the former will give the expectation of all future earnings ( market price of the share) against its present performance the latter is merely a statement of the dividend issued per share by a company.

P/E: Price of a stock divided by its earnings per share. The price-earnings ratio, also known as the multiple, gives investors an idea of how much they are paying for a company's earning power.

EPS: The portion of a company's profit allocated to each outstanding share of common stock. The amount is computed by dividing net earnings by the number of outstanding shares of common stock. For example, a corporation that earned \$10 million last year and has 10 million shares outstanding would report earnings per share of \$1.

Source(s)

by vagarant - 7 years ago

Price earnings is a short form for The ratio of price of the stock and the earning per share.

So a stock pays \$2.00(per year or over previous 12 month period) in dividend and it is selling at \$100.00 per share.
PE will be 100/2=50

For the same stock earnings per share is \$2.00 per year.

by minootoo - 7 years ago