The conversation between human and AI assistant.
How can I tell if the stock market is overvalued or undervalued?
Can you explain the price-to-earnings ratio further?
The price-to-earnings ratio, or P/E ratio, is calculated by dividing a company's stock price by its earnings per share. It provides insight into how much investors are willing to pay for each dollar of earnings. A higher P/E ratio indicates that investors have high expectations for a company's future earnings potential, while a lower P/E ratio suggests lower expectations.