A company whose stock is selling at a P/E ratio greater than the P/E ratio of the market most likely has

Question

Quizplus · Accepted Answer

A higher P/E ratio compared to the market often indicates that investors expect higher earnings growth in the future from the company, not necessarily less predictability, cyclicality, or lower expected growth. A lower dividend yield could be a result of the company reinvesting earnings into growth rather than distributing them as dividends, which aligns with the expectations of higher future earnings growth reflected in a higher P/E ratio.

A Company Whose Stock Is Selling at a P/E Ratio