in the current market session ross stores inc nasdaqrost is trading at 11500 after a 039 decrease however over the past month the stock spiked by 583 and in the past year by 332 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 below from its 52 week high by 1432 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 depending on the particular phase of a business cycle some industries will perform better than others compared to the aggregate pe ratio of 1643 in the specialty retail industry ross stores inc has a higher pe ratio of 3054 shareholders might be inclined to think that ross stores inc might perform better than its industry group its also possible that the stock is overvalued there are many limitations to price to earnings ratio it is sometimes difficult to determine the nature of the earnings makeup of a company shareholders might not get what theyre looking for from trailing earnings