This article is for investors who would like to improve their understanding of price to earnings ratios (P/E ratios). We’ll show how you can use Parsons Corporation’s (NYSE:PSN) P/E ratio to inform your assessment of the investment opportunity. What is Parsons’s P/E ratio? Well, based on the last twelve months it is 27.59. That corresponds to an earnings yield of approximately 3.6%.
How Do You Calculate A P/E Ratio?
The formula for price to earnings is:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for Parsons:
P/E of 27.59 = $35.980 ÷ $1.304 (Based on the year to December 2019.)
(Note: the above calculation results may not be precise due to rounding.)
Is A High Price-to-Earnings Ratio Good?