P/E Ratio (Price-to-Earnings) measures how much investors are willing to pay per $1 of company earnings. Core valuation metric for value investors (Benjamin Graham, Warren Buffett).
📊 Interpretation
- P/E < 15: Value zone (cheap)
- P/E 15-25: Fair value
- P/E > 25: Growth zone (expensive) — only justify if growth > 25%/year
- P/E < 0: Company losing money — risky
🎯 Sectors comparison
- Banks: P/E 8-12 (low)
- Tech: P/E 20-40 (high but growth)
- Utilities: P/E 10-15 (defensive)