What Is an Earnings Multiple?

The price-earnings ratio is also called "revenue multiple". The ratio of net income per share to the stock market price. For example, if the earnings per share is 3 yuan and the stock price per share is 30 yuan, the price-earnings ratio is 10 times (ie 30 ÷ 3). This is an indicator of the earning power of stock issuers. The net income per share is equal to the net income after tax, excluding the average number of shares issued and sold during a period. Investors who want high yields and high dividends are willing to buy stocks with high price-earnings ratios. Investors who want a steady income buy stocks with low price-earnings ratios. ^[1]