Question

It is common practice to evaluate p/e ratio to determine if a stock is cheap. If you had no comparable companies for a stock, how can you evaluate if a stock is cheap?

Answer 1

Generally, a high P/E ratio means that investors are anticipating higher growth in the future. The current average market P/E ratio is roughly 20-25 times earnings. Companies that are losing money do not have a P/E ratio.

Hope this helps you