The price-to-earnings (P/E) ratio tells you how much investors are paying today for each dollar of a company’s earnings. Think of it as a measure of expectations: a higher P/E ratio means investors expect strong future growth; a lower ratio suggests more modest expectations or that a stock may be more attractively valued. U.S. stocks carry elevated P/E ratios now, meaning expectations are high. The encouraging news is that strong earnings growth in early 2026 is helping bring those ratios closer to their historical norms.
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