Price to Earnings Ratio = Market Price per share Net (Diluted) Earnings per 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. Which of the following companies, has the highest P/E ratio? Target Corporation (for the year 2021) Walmart Inc. (for the year ended January 31, 2022) The Home Depot. Inc. (for fiscal 2021) Best Buy, inc. (for the year ended January 29, 2022)