P/E ratio (price / earnings): what it is and how to read it
The P/E ratio tells you how many times a company's annual profit you pay when you buy its share. With a P/E of 20, you pay 20 for every 1 of profit the company makes in a year. It is the most widely used valuation figure.
How it is calculated
P/E = share price / earnings per share over the last 12 months. The same as market cap / net income.
How to read it
A low P/E means the share is cheap relative to what it earns today; a high one, that the market expects strong earnings growth or sees the company as especially safe. Only compare similar companies: a bank at 8 and a tech company at 30 may both be at their usual price.
P/E ratio in the MeridIAn ranking
Among the 1,874 companies in the ranking with data, the median P/E ratio is 20.1: half are below and half above. The lowest 25% are below 13.6 and the highest 25% above 31.3.
For example: NVIDIA, 29.1; Apple, 39.0; Alphabet, 17.5; Banco Santander, 13.7.
By sector
| Sector | Median | Companies with data |
|---|---|---|
| Basic Materials | 19.2 | 119 |
| Communication Services | 17.1 | 80 |
| Consumer Cyclical | 17.9 | 197 |
| Consumer Defensive | 20.3 | 118 |
| Energy | 16.2 | 98 |
| Financial Services | 13.7 | 334 |
| Healthcare | 26.7 | 160 |
| Industrials | 25.3 | 361 |
| Real Estate | 21.5 | 92 |
| Technology | 31.5 | 228 |
| Utilities | 19.1 | 86 |
Lowest P/E ratio
What to watch out for
If the company loses money, there is no meaningful P/E (it comes out negative). A one-off gain, such as selling a business, can make the P/E look very low without the company being cheap.
Related metrics
All metrics in the glossary → · Stocks by sector and country → · Ready-made screeners →
General information for educational purposes, not investment advice. Figures from the latest weekly analysis (Oct 8, 2026) with the latest available price.