In the current session, Estee Lauder Cos Inc. EL is trading at $360.08, after a 1.10% increase. Over the past month, the stock increased by 4.55%, and in the past year, by 46.52%. With performance like this, long-term shareholders are optimistic but others are more likely to look into the price-to-earnings ratio to see if the stock might be overvalued.

Assuming that all other factors are held constant, this could present itself as an opportunity for shareholders trying to capitalize on the higher share price. The stock is currently higher from its 52 week high by 0.63%.

The P/E ratio is used by long-term shareholders to assess the company's market performance against aggregate market data, historical earnings, and the industry at large. A lower P/E can either represent a company's poor future earnings potential or a buying opportunity relative to other stocks. It shows that shareholders are less than willing to pay a high share price, because they do not expect the company to exhibit growth, in terms of future earnings.

Depending on the particular phase of a business cycle, some industries will perform better than others.

Compared to the aggregate P/E ratio of 29.37 in the Personal Products industry, Estee Lauder Cos Inc. has a higher P/E ratio of 43.17. Shareholders might be inclined to think that Estee Lauder Cos Inc. might perform better than its industry group. It's also possible that the stock is overvalued.

price to earnings ratio is not always a great indicator of the company's performance. Depending on the earnings makeup of a company, investors can become unable to attain key insights from trailing earnings.