ap0258

well easy way is a high P/E means over priced , so the opposite must be true for E/P.


Intuitively

A high Earnings/Price means that the unit of earnings per unit of price, so if the unit of earnings is higher PER unit of price, that means its a good deal as compared to a stock that a low unit of earnings per unit of price.. its rather simple. think about it like you are getting more earnings for the price you pay.

if you don't understand why a high E/P means undervalued, then i'm pretty sure you don't understand why a P/E means overvalued.