in the current market session tractor supply inc nasdaqtsco is trading at 19819 after a 157 drop however over the past month the stock spiked by 009 and in the past year by 3980 shareholders might be interested in knowing whether the stock is overvalued even if the company is not performing up to par in the current session assuming that all other factors are held constant this could present itself as an opportunity for shareholders trying to capitalize on the higher share price the stock is currently under from its 52 week high by 725 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 can either represent a companys poor future earnings potential or a buying opportunity relative to other stocks it shows that shareholders are less than willing to pay a high share price because they do not expect the company to exhibit growth in terms of future earnings most often an industry will prevail in a particular phase of a business cycle than other industries tractor supply inc has a better pe ratio of 2685 than the aggregate pe ratio of 1567 of the specialty retail industry ideally one might believe that tractor supply inc might perform better in the future than its industry group but its probable that the stock is overvalued price to earnings ratio is not always a great indicator of the companys performance depending on the earnings makeup of a company investors can become unable to attain key insights from trailing earnings