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CFA Level 1
Equity Investments

Calculating Price-to-Earnings Ratio

Easy Equity Valuation Techniques Price Multiples

In equity valuation, analysts frequently utilize various valuation multiples to gauge the relative value of a stock compared to its peers. One commonly used multiple is the Price-to-Earnings (P/E) ratio. Suppose Company X has a current market price per share of $50 and an earnings per share (EPS) of $5. What is the implied P/E ratio for Company X?

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