P/E ratio is a very important valuation index in the stock market. According to P/E ratio, we can analyze and find out profitable companies to invest. But how much is the P/E ratio reasonable? What is the normal range of P/E ratio? Here is a brief explanation for you.
P/E ratio, referred to as PE, refers to the ratio of stock price to earnings per share within an investigation period (usually 12 months). P/E ratio is an important indicator to measure the stock price and the profitability of enterprises. As P/E ratio combines stock price with enterprise profitability, its level can more truly reflect the level of stock price.
市盈率的计算公式为：市盈率=股价/每股收益
In the stock market, investors generally need to pay attention to the average earnings ratio of the market, the industry average earnings ratio and the individual stock market earnings ratio.
1、 Average earnings ratio of the market
The average P/E ratio of the overall market can reveal the operation of the whole market. When the average P/E ratio of the stock market is at a low level, it means that most of the stocks in the market have investment value. Even if it is still a bear market, it may only be the late stage of the bear market. At this time, it should refer to buying stocks. When the P/E ratio is at a high level, This shows that most stocks in this market have no investment value. Even if it is still a bull market, it may only be the late bull market. At this time, we should consider reducing our stock position.
1. The situation that the average price earnings ratio of the market is less than 10 times has never occurred in China. If it does, it will be a historic opportunity. At this time, the stock market is full of diamonds.
2. The average price earnings ratio of the market is 10-15 times, which is relatively rare.
3. The average price earnings ratio of the market is 15-20 times, which is relatively rare. There have been several important market bottoms in history, and it is very valuable to invest in the stock market at this time.
4. The average price earnings ratio of the market is between 25-40 times, which is quite common. The market fluctuates in this region most of the time. The operation strategy that should be followed at this time is to follow the trend. If it is in a bull market at this time, you should buy stocks or continue to hold them, while in a bear market, you should sell stocks.
5. The average P/E ratio of the overall market is between 40-60 times, which is relatively rare. Many important market tops have appeared in this area. At this time, the stock market is boiling. Anyone who goes to any public place can hear someone talking about stocks.
6. The average price earnings ratio of the market is 60-80 times, which is relatively rare. It has only occurred a few times in domestic history. Without exception, when this situation occurs, the subsequent bear market is extremely fierce.
7. When the average price earnings ratio of the market is more than 80 times, this situation has never been seen before. If this situation really occurs, I believe that many people will not want to eat tea or even work. At this point we should refer to selling stocks.
2、 Average industry P/E ratio
The position of the industry can be determined by analyzing the average P/E ratio of the industry
3、 Earning ratio of each stock market
The earnings ratio of individual stock markets can be divided into: dynamic P/E ratio, static P/E ratio and rolling P/E ratio
1. The earnings ratio of each stock market is used to analyze the stock price and the company's profitability.
2. You can compare the stock market earnings ratio with the industry average earnings ratio to determine the level of the industry earnings ratio.
