The P/E (price-to-earnings) ratio is a share's price divided by the company's earnings per share: how many years of earnings are built into the price.
The P/E ratio (price to earnings) is a share's price divided by the company's annual earnings per share. It shows how many years of current earnings investors are willing to pay for a stake in the business.
If a share costs 200 dollars and the company earns 10 dollars of profit per share, the P/E is 20. A high P/E means the market expects fast profit growth, and any disappointment hits the price hard. A low one may point to an undervalued company, or to problems that make the market doubt its future.
P/E is useful when compared with companies in the same industry and with the company's own history. On its own it guarantees nothing: a loss-making company has no P/E at all, and a one-off profit can push it artificially low.
In detail, with examples: How to buy US stocks from Ukraine: brokers, NBU limits and taxes
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