P/E ratio (KGV)
Share price divided by earnings per share: how many years of profit you pay for one share.
In short
As of 5 October 2026The P/E ratio (price-to-earnings ratio, German KGV) is the share price divided by earnings per share. It shows how many years of profit you pay for a share. If a share costs 100 euros and the company earns 5 euros per share, the P/E is 20. A low P/E is not automatically cheap; compare within one industry.
The price-to-earnings ratio (German: KGV, Kurs-Gewinn-Verhältnis) is one of the best-known valuation metrics. It divides the share price by earnings per share.
Example: a share costs 100 euros and the company earns 5 euros per share per year. The P/E is 20, so you pay twenty times the current annual profit.
A low P/E does not automatically mean cheap, nor a high one expensive. Fast-growing firms often have high P/Es, struggling firms low ones. Comparing companies within the same industry is more useful.
Related terms
As of 5 October 2026 · Educational content, not investment or tax advice.