Fixing Value

The Price Earnings (PE) ratio and Price/Earnings to Growth (PEG) ratio are commonly used tools for determining the value the market has placed on a stock. The PE ratio is a common measure of the relative value of a stock based on its Earnings Per Share (EPS). Breaking it down mathematically, PE denotes the amount that you are willing to pay for one rupee worth of the company's earnings. A stock with a high PE ratio suggests that the firm has strong future earnings growth prospects. But investors perceive a low

This article was originally published on November 08, 2007.