What is the definition of **P/E 5y Avg**?

The Price to Earnings Ratio (also called the PE ratio) is the primary valuation ratio used by most equity investors. It is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share.A hig P/E ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with a lower P/E ratio. The P/E ratio can be seen as being expressed in years, in the sense that it shows the number of years of earnings which would be required to pay back the purchase price, ignoring inflation. Unlike the EV/EBITDA multiple which is capital structure-neutral, the price-to-earnings ratio reflects the capital structure of the company in question. The reciprocal of the P/E ratio is known as the earnings yield. For each of 5 years, we take the average share price for each year up to the annual results date, then divide by the average of the EPS for that annual result, and the previous annual result. We then calculate the average of all 5 values.

Stockopedia explains **P/E 5y Avg**...

This is is the primary valuation ratio used by most equity investors. A high P/E ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with a lower P/E ratio. The P/E ratio can be seen as being expressed in years, in the sense that it shows the number of years of earnings which would be required to pay back the purchase price, ignoring inflation.

Unlike the EV/EBITDA multiple which is capital structure-neutral, the price-to-earnings ratio reflects the capital structure of the company in question

Which Guru Screens is **P/E 5y Avg** used in?

Value Investing:

Growth Investing:

- CAPE (Price to 10 Year Average Earnings)
- Earnings Yield ( EBIT / EV )
- Earnings Yield ( EBIT / EV ), Last Year
- EV / Operating Profit
- Enterprise Value / Free Cash Flow
- Enterprise Value / Sales
- Enterprise Value to EBITDA
- Ben Graham & James Rea Deep Value Score
- Benjamin Graham Multiplier
- Magic Formula Ranking

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