A high P/E ratio always indicates that a stock is overpriced by the market.

Question

Quizplus · Accepted Answer

A high P/E ratio can indicate that a stock is overpriced, but it is not always the case. A high P/E ratio can also indicate that the market has high expectations for the company's future earnings growth. Additionally, P/E ratios can vary significantly by industry, so it is important to consider the P/E ratio of comparable companies within the same industry.

A High P/E Ratio Always Indicates That a Stock Is