I often read investment articles discussing stocks of different companies worthy of investing in. Usually the author will give an opinion about the current valuation of the company. Is it over, under or fair valued? Many times these opinions will be given without a clear explanation of how this valuation was determined. While there are many factors that come into play when trying to get an idea of different companies’ valuation levels, the P/E ratio (price divided by earnings per share) is one of the easiest ways to get a quick idea of how the market is currently pricing a company.