The price-earnings ratio reﬂects investors' expectations about the future proﬁtability of the company.

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The price-earnings ratio is a valuation metric that measures the current stock price relative to its earnings per share. It is often used by investors to assess whether a company's stock is overvalued or undervalued. A high P/E ratio may indicate that investors expect the company to experience strong earnings growth in the future, while a low P/E ratio may suggest that investors have lower expectations for future profitability. Therefore, the price-earnings ratio does reflect investors' expectations about the future profitability of the company.

The Price-Earnings Ratio Reﬂects Investors' Expectations About the Future Proﬁtability