Can Stocks Have a Negative Price-to-Earnings (P/E) Ratio?
Yes, it is possible for a stock to have a negative price-to-earnings (P/E) ratio.
While the P/E ratio is often seen as high or low, a negative P/E occurs if a company has a loss for an accounting period rather than a profit.
Since the P/E ratio is a stock price relative to earnings-per-share, a high P/E ratio means that a stock’s price is high relative to earnings. A low P/E ratio indicates that a stock’s price is low compared to earnings.
Of course, you’d only be able to conclude that it’s high or low by tracking it over time. For example, if it rarely changed or changed little, you’d perceive it as neither high nor low, but stable.
Key Takeaways
- A stock can have a negative P/E ratio—for example, if a new company…
