In the current session, the stock is trading at $41.77, after a 1.35% spike. Over the past month, HSBC Holdings Inc. (NYSE:HSBC) stock increased by 5.44%, and in the past year, by 24.94%. 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.

Evaluating HSBC Holdings P/E in Comparison to Its Peers

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 could indicate that shareholders do not expect the stock to perform better in the future or it could mean that the company is undervalued.

HSBC Holdings has a lower P/E than the aggregate P/E of 9.48 of the Banks industry. Ideally, one might believe that the stock might perform worse than its peers, but it's also probable that the stock is undervalued.