P

Glossary · PSX term

Price-to-earnings ratio.

The price-to-earnings ratio compares a company's share price with its earnings per share. It is a valuation shortcut, not a complete investment case, and should be compared within the same sector.

Definition

P/E is calculated as share price divided by EPS. Lower or higher P/E can mean different things depending on growth, risk, cyclicality, and earnings quality.

Worked example

If a share trades at Rs. 100 and EPS is Rs. 10, the P/E ratio is 10x.

Related on PSX Clarity

Earnings per share

Market capitalization

More glossary terms

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Price-to-book ratio

Price-to-book ratio compares a company's market price with its book value per share. It is often used for banks, insurers, and asset-heavy PSX companies.

Price return measures how much a share price has moved over a period, excluding dividends and other income. It is different from total return.

Payout ratio shows how much of a company's earnings are distributed as dividends. It helps investors assess whether the dividend appears conservative or stretched.

Proxy voting lets a shareholder authorise someone else to vote their shares at a company meeting.

A price band is the allowed range between the highest and lowest price a stock can trade at in a session.

Pakistan Investment Bonds (PIBs)

PIBs are longer-term government bonds issued by Pakistan, typically 3 to 30 years.

The policy rate is the benchmark interest rate set by the State Bank of Pakistan.

The PEG ratio divides the P/E ratio by the company's earnings growth rate.

Price-to-sales ratio

The price-to-sales ratio compares a company's market value to its revenue.