The price/earnings ratio is a measure of investor confidence in a stock's future performance.

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The price/earnings ratio (P/E ratio) is a valuation ratio that compares a company's stock price to its earnings per share (EPS). It is often used as a measure of how much investors are willing to pay per dollar of earnings. A higher P/E ratio generally suggests that investors are more optimistic about a company's future performance and growth potential, while a lower P/E ratio may indicate lower investor confidence or a less favorable outlook. Therefore, the P/E ratio can be seen as a reflection of investor confidence in a stock's future performance.

The Price/earnings Ratio Is a Measure of Investor Confidence in a Stock's