Is a low-PER stock a good company
A stock with a low PER (price to earnings ratio) is easy to read as “an overlooked quality stock.” The hope is that a low trading price means owning a good company for less. Jupick counted the stocks on its watchlist to see whether that holds.
Jupick summarizes each stock's financial strength as a grade from S to D, and shows separately, through PER, how many times earnings the share price is. The grade answers “is this company sound,” and PER answers “is the price high relative to earnings right now.” They answer different questions. So how closely do the two move together?
If the common belief were right, good grades would cluster among low-PER stocks. The actual numbers did not show that.
What was counted and how
Jupick took the major stocks it covered as of September 22, 2026 and set each stock's overall grade next to its PER. The grade distribution was 9 stocks at S, 106 at A, 198 at B, 72 at C and 15 at D. About half sat at B, a distribution that is thick in the middle.
PER can only be calculated when there are earnings, so 37 stocks with losses or no value were left out of the PER comparison. The remaining 363 stocks were used to compare PER and grade.
Grades with small samples call for care. S has 9 stocks and D has only 5 with a PER, so the figures for these two grades are a rough indication of a tendency at most. This measurement is a snapshot taken on September 22, 2026, and it changes as the data are updated.
Which grades the lowest-PER stocks had
Jupick looked at the grades of the lowest quarter by PER (PER of 15 or below, 90 stocks). If the common belief held, good grades would cluster here.
B dominated at 69 percent. The top grades, S and A combined, made up only 21 percent, and C and D together made up 10 percent. Most of the lowest-PER stocks had a middle grade, not a top grade.
In other words, this sample gave no basis for treating a low PER alone as a sign of solid finances. A low price and a good company sometimes overlap, but for the most part they went their own ways.
Good grades were more common at the high-PER end
At the other end, among the highest quarter by PER (PER of 38.9 or above, 90 stocks), S and A combined made up 32 percent. That is higher than the 21 percent in the lowest-PER group.
It looks odd at first, but it is a common pattern. When a company has solid finances and grows steadily, the market recognizes that value and is willing to pay a high price for it, so better companies often carry higher PERs. Hoping that a good company sits neglected at a low price and how good companies actually trade in the market are two different things.
The median PER was 27.3 for the top grades (S+A) and 31.5 for the bottom grades (C+D). Rather than the good grades standing out as priced lower, the two groups had similar PERs, with the top grades only slightly lower and no large gap between them.
Grades and PER do not move in step
Lining up the median PER by grade makes the mismatch clearer: 40.0 for S, 25.0 for A, 20.8 for B, 30.7 for C and 96.3 for D.
This is not a neat relationship in which PER falls as the grade improves. The lowest PER sat with the middle grade B, not the top grade S, and both ends, S and D, showed high PERs. Drawn as a chart, the line does not slope one way; it sags in the middle.
This is not chance. It follows from the two numbers measuring different things. The grade measures financial strength and PER measures price level. They are different axes, so there is no reason for them to move together.
The same high PER, opposite meanings
S and D both had high PERs, but the meaning of that height was opposite. The high PER at S is closer to a premium the market puts on good companies. The high PER at D comes from earnings that are near the floor.
PER is the share price divided by earnings per share, so when earnings are close to zero the denominator shrinks and the multiple balloons. The D median of 96.3 is closer to “thin earnings inflated the multiple” than to “priced high because it is good.” The same high number was a sign of quality on one side and a sign of weak earnings on the other.
So PER alone cannot settle whether a company is good or bad, because the same value can carry opposite circumstances. How to read PER is covered further in the article on what PER means and how it is calculated.
What this measurement says and does not say
These numbers say one thing: financial strength (the grade) and price level (PER) do not move together, so a stock priced low relative to earnings is not automatically a good company. That is why Jupick shows grades and valuation separately.
What they do not say is just as clear. This measurement says nothing about which stocks go up or down. It does not mean low-PER stocks are bad or high-PER stocks are good. It only counts how the two numbers sat on this watchlist.
The figures cited were measured on September 22, 2026, and some grades have small samples, so this is an observation at one point in time, not a fixed law. This content is for information only and is not investment advice. Jupick gives no trading advice and no price forecasts. Investment decisions and responsibility for them rest with the user.
Frequently asked questions
- Is a stock with a low PER automatically a good company?
- Not in this watchlist sample. Among the major stocks on September 22, 2026, 69% of the lowest-PER quarter had the middle grade B rather than a top grade, and top grades were more common at the high-PER end. The grade measures financial strength and PER measures price level, two different axes with no reason to move together. A low price and a good company mostly went their own ways.
- Do better grades come with lower PERs?
- Not in a neat way. The median PER by grade was 40.0 for S, 25.0 for A, 20.8 for B, 30.7 for C and 96.3 for D, so the lowest PER sat with the middle grade B, not the top grade S, and both ends, S and D, were high. The same high PER meant opposite things, though: at S it was a premium the market puts on good companies, and at D it was a multiple inflated by thin earnings.