What it measures
The price to earnings (P/E) ratio compares a share's current price with the profit earned per share.
In one line: P/E = market price per share / earnings per share (EPS). The result is a multiple, written like 5.84x. It reads roughly as the years of current profit the price pays for.
How to read it
A higher P/E means investors pay more for each unit of profit, usually because they expect growth. A lower one means they pay less, often because they expect slow growth or risk. In the latest bank posts, the Indonesian banks sit at about 5.84x to 12.6x on trailing earnings, and ICICI Bank at 16.0x on an annualised quarter.
Where it misleads
The earnings period changes the answer. Trailing twelve months, an annualised quarter and a full fiscal year give different multiples for the same stock, so only compare like with like. A one-time gain inflates EPS and makes a stock look cheaper than it is. A cheap P/E can also reflect a business the market expects to shrink. For a loss-making company there is no P/E at all.
Worked example
In Mandiri's Q3 2026 post, net income attributable to owners over the trailing twelve months was approximately Rp64,097,809 million, built as FY2025 Rp56,293,950 million less 9M 2025 Rp37,730,142 million plus 9M 2026 Rp45,534,001 million. Shares were 93,333,333,332.
- EPS: 64,097,809 million / 93,333,333,332 = about Rp686.76, as the post states.
- Share price at 30 September 2026: Rp4,010.
- P/E: 4,010 / 686.76 = 5.84x, as the post states.
The post describes this as the cheapest of the three Indonesian banks compared on both P/E and P/B.
Where to find it
Market data for the price, income statement for earnings.
See also: P/B Ratio, EV/EBITDA, Net Income.