Definition
The P/E ratio — Price/Earnings — is the share price divided by the company earnings per share. It is the most widely used metric for assessing whether a stock is cheap or expensive relative to its earnings.
Formula: P/E = Share price divided by Earnings per share (EPS)
Example: Price 200 NOK · EPS 10 NOK · P/E = 20
Rule of thumb: Below 15 = potentially cheap · 15-25 = normal · Above 25 = high growth expectations
"Numbers are not boring — they are the truth dressed in mathematics."— Florence Scovel Shinn