in the current market session adobe inc nasdaqadbe is trading at 65869 after a 036 drop however over the past month the stock went up by 330 and in the past year by 4088 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 225 the pe ratio measures the current share price to the companys eps it is used by longterm investors to analyze the companys current performance against its past earnings historical data and aggregate market data for the industry or the indices such as sp 500 a higher pe indicates that investors expect the company to perform better in the future and the stock is probably overvalued but not necessarily it also shows that investors are willing to pay a higher share price currently because they expect the company to perform better in the upcoming quarters this leads investors to also remain optimistic about rising dividends in the future most often an industry will prevail in a particular phase of a business cycle than other industries compared to the aggregate pe ratio of the 9739 in the software industry adobe inc has a lower pe ratio of 5734 shareholders might be inclined to think that the stock might perform worse than its industry peers its also possible that the stock is undervalued 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