Value investors seek companies with a low P/E ratio; a lower P/E ratio means you’re paying less per $1 of current earnings.
For those who don’t have time to perform exhaustive research, the price-earnings ratio (P/E) is an often-used measure for quickly identifying undervalued or cheap stocks. The metric derives from dividing a stock’s share price by its earnings per share (EPS). Value investors seek companies with a low P/E ratio; a lower P/E ratio means you’re paying less per $1 of current earnings.