P/E . . .

is a commonly used abbreviation for the price-earnings ratio. It refers to a multiple applied to a company’s earnings (net operating profit after tax) to estimate its value. For example, a company with earnings of $500,000 and a P/E of twelve would have an estimated value of $6 million (or twelve times $500,000). Dividing that value by the number of outstanding shares gives an estimated value for each share of company stock. See: Price-Earnings Ratio, Pricing.