Low P/E ratios tend to indicate that a company will _______,ceteris paribus.
A)grow quickly
B)grow at the same speed as the average company
C)grow slowly
D)P/E ratios are unrelated to growth
E)none of the above

Question

Quizplus · Accepted Answer

A low P/E ratio typically indicates that investors are not willing to pay a high price for the company's earnings. This could suggest that they do not have high growth expectations for the company, which in turn could suggest that the company may grow more slowly than average. However, it is important to note that P/E ratios are just one factor to consider when evaluating a company's growth potential - other factors such as industry trends, competition, and management strategy should also be taken into account.

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