Impect of low/high PE RATIO

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gopal (Querist)
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31 December 2009 If a company having PE Ratio is 10 and another company whose PE Ratio is 5 which one is good for the invester and how?
please elaborate the impect of PE Ratio.

Rasesh

Rasesh (Expert)
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02 January 2010 A high PE ratio indicates that the stock is more expensive than the stock with lower PE. However, on the flip side, it also means that the market is giving a higher valuation to the company with higher PE due to higher growth potential of the company.

PE is not the only factor to be considered in stock selection.