PDSnet Glossary

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Introductory Technical Fundamental Economics Opinion Sectors International Regulatory Other Markets

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Definition

The value which the market places on a share. The price of a share in relation to its most recent earnings per share are reflected in the P:E ratio and it's reciprocal, the earnings yield. Highly rated shares are those which have an extended track record of producing steadily increasing earnings per share. This rating is then reflected in a high P:E ratio and a low earnings yield. Conversely, poorly rated companies have erratic track records of earnings and are seen by the market as unreliable. This is reflected in a low P:E ratio.

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