The Price-to-Earnings Ratio (P/E Ratio) is a financial metric used to evaluate a company's stock price relative to its earnings. It is calculated by dividing the current market price of a share by the earnings per share (EPS). A higher P/E ratio may indicate that investors expect future growth, while a lower ratio might suggest that the stock is undervalued or that the company is facing challenges. Investors often use the P/E ratio to compare companies within the same industry, helping them make informed decisions. It is important to consider other factors, such as market conditions and company performance, when interpreting the P/E ratio, as it does not provide a complete picture of a company's financial health.