looking into the current session abbott laboratories inc abt shares are trading at 11039 after a 004 increase moreover over the past month the stock spiked by 1296 but in the past year decreased by 771 shareholders might be interested in knowing whether the stock is undervalued even if the company is performing up to par in the current session the pe ratio is used by longterm shareholders to assess the companys market performance against aggregate market data historical earnings and the industry at large a lower pe could indicate that shareholders do not expect the stock to perform better in the future or it could mean that the company is undervalued compared to the aggregate pe ratio of the 2945 in the health care equipment  supplies industry abbott laboratories inc has a lower pe ratio of 3354 shareholders might be inclined to think that the stock might perform worse than its industry peers its also possible that the stock is undervalued in conclusion the pricetoearnings ratio is a useful metric for analyzing a companys market performance but it has its limitations while a lower pe can indicate that a company is undervalued it can also suggest that shareholders do not expect future growth additionally the pe ratio should not be used in isolation as other factors such as industry trends and business cycles can also impact a companys stock price therefore investors should use the pe ratio in conjunction with other financial metrics and qualitative analysis to make informed investment decisions