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  Stock Market Basics 81: PER Explained — Understanding How Many Times Earnings a Stock Trades At 3-Line Summary PER , or price-to-earnings ratio, shows how many times a company’s earnings investors are paying for through the stock price. A low PER does not always mean undervaluation, and a high PER does not always mean overvaluation. Investors should analyze PER together with EPS quality, growth potential, industry structure, business cycles, and cash flow. Recommended Keywords PER, price to earnings ratio, earnings multiple, EPS, value investing, growth investing, stock valuation, stock market basics, investing basics, undervalued stocks, overvalued stocks, long term investing Table of Contents What Is PER? PER Formula Why PER Matters What a Low PER Means What a High PER Means PER and EPS PER and Growth Rates The Limits of Using PER for Undervaluation The Limits of Using PER for Overvaluation Why PER Differs by Industry Why PER Becomes Confusing in Cyclical Industries How to Anal...