Price to Earnings Ratio $=$ Market Price per share $-$: Net $($Diluted$)$ Income$/$Earnings per common share

The Price Earnings Ratio $($P$/$E Ratio$)$ is the relationship between a company$$s stock price and earnings per share $($reported in the income statement$).$ It is one of the most commonly used ratio that gives investors a better sense of the valuation of a company. The P$/$E ratio shows the expectations of the market and is the price you must pay per unit of earnings for the company.

Earnings are important when valuing a company$$s stock because investors want to know how profitable a company is and how profitable it will be in the future. Furthermore, if the company doesn$$t grow and the current level of earnings remains constant, the P$/$E can be interpreted as the number of years it will take for the company to pay back the amount paid for each share.

To determine the P$/$E ratio, you must determine $($use Google or any other search engine$)$ the current market price per share of the company you are analyzing. Since stock prices change constantly, the EPS will be different depending on when you determine the stock price.

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Which of the following companies has the highest P$/$E ratio?

Group of answer choices

Walmart Inc. $($for the year ended January $31,2022)$

Best Buy, Inc. $($for the year ended January $29,2022)$

Target Corporation $($for the year $2021)$

The Home Depot, Inc. $($for fiscal $2021)$