Of course not. If the P/E was 1, every single public company would be immediately gobbled up by Private Equity firms, who would make their money back after a few years of operation and the rest would be pure profit.

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Noaidi 4 hours ago | parent [-]

Of course they would! If the P/E of a company is 1.1 it is overvalued by definition so why would anyone buy an over valued company?

So you have to be a complete idiot to but stock in a company with a P/E of 500!

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darth_aardvark 3 hours ago | parent [-]

> Of course they would! If the P/E of a company is 1.1 it is overvalued by definition so why would anyone buy an over valued company?

This is obviously untrue. Would you sell a box that spits out $1 million dollars a year for 1 million dollars?

	▲	Noaidi 2 hours ago \| parent [-]
		I do not know the P/E ratio for your magic box, sorry. A P/E ratio of 1 indicates that a company's share price is equal to its earnings per share, suggesting that investors are paying $1 for every $1 of earnings. A P/E ratio of 10 indicates that a company's share price is equal to its earnings per share, suggesting that investors are paying $10 for every $1 of earnings. Which is the better deal? Neither! The first company could suddenly earn more per share and you will be better off. The second company could loose earnings per share and you will be worse off. A P/E of 1 means you are paying exactly the earnings per share, which is the fairest and most non speculative price. You are paying what the company is earning.