Low P/E ratios tend to indicate that a company will _______, ceteris paribus.

Question

Quizplus · Accepted Answer

A low P/E ratio usually indicates that investors have low confidence in the company's growth prospects, leading to a low valuation of its stock. This may be due to various reasons such as poor financial performance, high debt, or lack of competitive advantages. Therefore, a low P/E ratio tends to suggest that the company will grow slowly or at a lower rate than the average company, ceteris paribus.

Low P/E Ratios Tend to Indicate That a Company Will