💵 Earnings Are the Engine

When you buy a stock, you’re not just buying a ticker symbol — you’re buying a slice of a company’s future profits. Earnings are what power long-term growth. Hype fades and headlines come and go, but profits are what keep a company (and your portfolio) moving forward.

If a company can’t consistently make money, you’re betting on a dream — not a business. Real earnings separate the hype stories from the true success stories.

📊 The P/E Ratio — Your Shortcut to Value

The Price-to-Earnings (P/E) ratio tells you how much investors are willing to pay for $1 of a company’s profits. If a stock trades at $100 and earns $5 per share, the P/E is 20 — meaning you’re paying $20 for every $1 of earnings.

• High P/E = investors expect big growth ahead.
• Low P/E = investors are cautious — or it’s a hidden gem.

Think of it as a quick “vibe check” on how optimistic or skeptical the market feels about a company’s future.

⚡ The Growth Effect

Here’s where the magic happens: a company earning $1 per share with a $20 stock price (P/E = 20) doubles earnings to $2. If the P/E stays the same, the price should rise to $40 — that’s a double for you. But if optimism also grows and the P/E expands to 25, the stock hits $50. You just made 150% — half from business success, half from market confidence.

🧭 The Takeaway

Earnings are the heartbeat of every stock. The P/E ratio is the rhythm that tells you how the market feels about that heartbeat. Learn to read both, and you’ll start seeing what most investors miss — the difference between a story and a strong business.