Q&A with David Edwards: How do I know if a stock is overvalued?

Q&A with David Edwards: How do I know if a stock is overvalued?

Question: To find the price-earnings ratio of a stock, I divide the current stock price with the last four quarters of earnings. If the current list price is higher than the number I get when I calculate the P/E ratio, what does that mean? Is the stock overvalued?

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