P/E.. can you explain this.....................?

A share is a tiny piece of a company that you can buy on the stock market.

If a stock has earnings per share (that's profit) of $2 and sells in the market for $40, it is said to have a price-earnings (P/E) ratio of 20 (40/2). Stocks like Google, for which very rapid future growth is forecast, tend to have very high P/Es or multiples, over 50. Mature companies tend to sell at low multiples, sometimes below 10.

The really hard part to figure out is if a forecast of growth is accurate enough to justify a high P/E or if a forecast of low growth is giving a company an appropriate price to warrant a low P/E.

Price to Earn Ratio is one of the index to analyze the stock.
Since it refers the earning power of the companys, it's one of the more common index we use to analyze stocks.
But some of the industries, such as Internet Industy and Mining Industry couldn't use PE since their running styles and cycle are different from other industries.

VinTech says it all!
While the PE ratio is the most fundamental method for valuing a company's stock the most important thing is the quality of the company. Is it in a growing business sector(internet), does it have good management(GE), rock solid finances(XOM) etc. The three measures of a company is simply "quality, quality and quality" An good example is the Hershey candy company. Ever eat a Hershey candy bar you did not like, or see a three year old with smile while licking his/her fingers? What you are seeing is a life long customer for Hershey.

more numbers

P/E is the ratio of the price of a share to who much the company earned in the most recent time frame per share.

Those shares that have high P/E are those that the investing community is showing a high degree of confidence in the stability of the company.

Those shares with low P/E do not generate such confidence.

So it comes down to the collective judgment of the market--can you rely on that?

It's Price/Earnings ratio, or what the stock costs vs. what kind of profit the company is making per share. The higher this number, the more risky the stock is, as it becomes overvalued (people are buying it up, but there's no evidence the company is producing a profit).