Worcester Corporation has a P/E ratio of 15. Natick Corporation is in the same industry as Worcester, but has a P/E ratio of 20. Possible interpretations of this discrepancy include

Question

Quizplus · Accepted Answer

The P/E (Price-to-Earnings) ratio is a measure of a company's current share price relative to its per-share earnings. A higher P/E ratio might indicate that investors expect higher earnings growth in the future compared to companies with a lower P/E ratio. Therefore, if Natick Corporation has a higher P/E ratio than Worcester Corporation, it suggests that investors may expect Natick to grow faster than Worcester. The P/E ratio does not directly indicate whether a stock is overpriced (A), nor does it directly relate to the absolute level of earnings per share (B) or the stock price (D).

Worcester Corporation Has a P/E Ratio of 15