On the Historical chart, the black line represents the current P/E (price-to-earnings) ratio that a stock is trading at. This gives you a visual reference point: not just what the company has traded at, but where it’s trading right now.
As the black line moves across time, it stays fixed to today’s valuation. For example, if a stock is currently trading at a P/E of 18, you’ll see a line drawn at that level all the way through the historical graph. This lets you quickly gauge whether this valuation has been common, rare, or even unprecedented in the company’s history.
Comparing the Black Line to the Normal P/E Line
To give even more context, the black line works hand-in-hand with the Normal P/E line (plotted in blue). While the Normal P/E reflects what the market has historically paid for the stock, the black line shows what the market is paying today.
This comparison can highlight moments of opportunity or caution, but it's important to remember that this is not investment advice—just an analytical tool to help guide your thinking:
If the black line is below the Normal P/E line, the stock may be undervalued relative to its historical norms.
If it’s above, the stock could be trading at a premium, and it may be worth asking why.
If they’re aligned, the current valuation is consistent with how the stock has typically been priced.
Interpreting the Black Line
Remember: current valuation isn't a prediction—it's a snapshot. The black line helps you ask better questions, like:
Has the company historically traded at this P/E during similar growth periods or risk environments?
Is the current valuation justified by expected earnings growth or other fundamentals?
Are there macro factors or temporary events influencing today’s multiple?
Used in tandem with other lines on the graph, the black line adds an essential dimension: it shows you how today’s valuation compares to historical norms, helping you make more informed decisions about whether a stock looks cheap, expensive, or fairly valued in context.