People often want a snapshot of a companies value. The PE ratio is often the first place people look. If a company has a PE ratio of 20, you can expect that you will need to invest $20 into that stock before you will earn $1 of the companies earnings. As of today 8/25 Costco has a PE ratio of 33.56. So if I invested $33.56 into Costco stock using Stash or a brokerage, I could expect to get $1 of their earnings. Obviously the lower the PE ratio is, the more attractive it is to an investor. But a high PE ratio is not necessarily a bad thing either. We’ll write more on that soon and add a link to the article here.
The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative to its per-share earnings.
This definition provided by Investopedia