™A $40 share price divided by $2 annual EPS gives P/E 20. Negative earnings and forward versus trailing estimates need different interpretation.
Fundamentals
P/E ratio
Price-to-earnings: market price per share divided by earnings per share.
Plain-English context
Put the definition to work.
Specify EPS period and accounting basis. Negative or near-zero earnings can make conventional P/E interpretation meaningless.
Further reading and verification. Examples are hypothetical, not current quotes or recommendations. Product terms, tax treatment and market rules can change. SEC — financial statement guide