P/E ratio (price to earnings)

The best-known multiple: how many years of current earnings the share costs. A P/E of 20 means you pay $20 for every dollar of annual profit — or, flipped around, that the business yields you 5% if profit stays flat.

A low P/E isn't cheap and a high one isn't expensive; the multiple only tells you what growth and quality the market is discounting. Three usual traps: profit inflated by a one-off (a divestment, a legal settlement) sinks the P/E without anything improving; a heavily indebted company looks cheap because the multiple ignores debt; and at the bottom of the cycle a cyclical shows its lowest P/E exactly when it's doing worst.

That's why the adjusted P/E — on normalized profit, without one-offs — is shown here alongside the forward P/E, which uses expected earnings. Comparing both against the company's own history says more than comparing them against the market.