Why Does Industry View the P/E Ratio as Important?
Investors find it useful to compare the Price to Earnings ratio of a company compared to the P/E ratio of the industry. This helps provide a relative gauge of how the company is perceived. P/E comparisons are also carried out between one industry and another industry. The P/E ratio is only an indicator and simply raises more questions, however it is still an important financial ratio. Historical Price/Earnings ratio analysis also provides useful data, since this historical analysis when compared with the industry analysis can help provide some indications for the future P/E ratio.
