Macro glossary
Price-to-Earnings (P/E) Ratio
The ratio of a stock's or index's price to its trailing twelve-month earnings per share.
Definition
P/E ratios are the most common valuation metric. S&P 500 P/E above 25 is historically expensive; above 30 is comparable to the dot-com peak. Shiller CAPE (cyclically adjusted P/E) smooths over cycles for comparability.