Stock knowledge-price-earnings ratio

What is price-earnings ratio?
The price-to-earnings ratio is an important indicator that reflects the stock income and risks. It is also called the market profit rate. It is divided by the current market price per share by the company's after-tax profit per share. The formula is as follows:
Price-earnings ratio = stock market price per share/post-tax profit per share
In the daily statement of the Shanghai Stock Exchange, the price-to-earnings ratio is calculated based on the closing price of the current day, the comparison with the profit forecast value after tax per share for the current year is called price-earnings ratio ⅱ. However, Hong Kong-listed companies do not require earnings forecasts. Therefore, a Shares (such as Tsingtao Beer) in the H shares sector only have price-to-earnings ratio I. Therefore, in the general sense, the price-to-earnings ratio is I.
In general, the price-to-earnings ratio indicates how many years the company has to earn to reach the current market price. The lower the price-to-earnings ratio, the better. The smaller the value, the shorter the investment recovery period, the smaller the risk, the higher the investment value. The larger the multiple, the longer the current period, and the greater the risk. The price-to-earnings ratio for the 1891 period between 1991 and one hundred is generally between 10 and 10 ~ 20 times, usually 60 to 60 in Japan ~ Between 70 times, China's stock market has had thousands of times of stocks, but currently it is more than 20 ~ About 30 times. It must be noted that the observed price-to-earnings ratio cannot be absolute. Only one indicator can be used to draw conclusions. Because the profits after-tax of the previous year in the price-earnings ratio do not reflect the current operating conditions of listed companies; the predicted values of the current year lack reliability, for example, this year, many listed companies publicly apologized to the majority of shareholders for their high earnings forecasts. In addition, they had different criteria for judging the development of different markets. Therefore, the price-to-earnings ratio index and the stock statement only provide real data. For investors, what they need is to use their own talents to continuously research innovative analysis methods, only by combining basic analysis with technical analysis can we make correct and timely decisions.
PS: from Baidu knowledge