P/E Ratio Calculator
Calculate a stock's price-to-earnings ratio from share price and earnings per share, with earnings yield, interpretation limits and a worked example.
Results · USD
P/E ratio
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Educational estimates · not financial advice · free, no signup
How this was calculated
P/E = share price ÷ earnings per share (EPS). Earnings yield = EPS ÷ price = 1 ÷ P/E. Price implied by a target P/E = target P/E × EPS.
Want more detail? Full formula notes & FAQs ↓
Detailed guide
What it is, how to use it, how to read the numbers, common mistakes, a worked example, formulas, and FAQs.
What this calculator is
The price-to-earnings ratio tells you how many dollars investors pay for each dollar of a company's yearly earnings. A P/E of 30 means the share trades at 30 times earnings. It is one of the most widely quoted valuation measures, though no single ratio says whether a stock is cheap or expensive. This calculator divides the share price by earnings per share. To judge the number, compare it with the same company's history, with similar companies and with growth prospects: high-growth firms often have higher P/Es. Check whether the EPS is trailing (last twelve months) or forward (analyst estimates), and note that the ratio is meaningless when earnings are negative.
When to use / who it helps
- You are screening stocks by valuation.
- You want to compare two companies in the same sector.
- You want to convert a P/E to an earnings yield.
- You want the price that a target P/E would imply.
- You are reading analyst reports.
How to use
Steps
- Enter the current share price.
- Enter earnings per share, trailing or forward.
- Read the P/E ratio.
- Compute the earnings yield as 1 divided by the P/E.
- Compare with peers and the company's own history.
- Check the source and period of the EPS.
How to interpret results
- A higher P/E means investors pay more per dollar of earnings.
- A high P/E may reflect expected growth, not overvaluation.
- A low P/E may signal problems as well as value.
- Negative earnings make the P/E not meaningful.
- Different sectors have different typical P/E ranges.
Common mistakes & gotchas
- Comparing P/Es across very different industries.
- Mixing trailing and forward EPS.
- Using it when earnings are negative or unusual.
- Treating a low P/E as a guaranteed bargain.
- Ignoring debt and cash flows.
Worked example
Worked example — $150 share price and $5 EPS
- P/E = 150 ÷ 5 = 30.
- Earnings yield = 5 ÷ 150 = 3.33%.
- At a target P/E of 20, the implied price is 20 × 5 = $100.
- If earnings grow to $6 with the price unchanged, P/E falls to 150 ÷ 6 = 25.
Result: The P/E is 30, equal to an earnings yield of about 3.33%.
To load the form's own demo values, tap Try example above the Calculate button.
How to calculate / formula
P/E = share price ÷ earnings per share (EPS). Earnings yield = EPS ÷ price = 1 ÷ P/E. Price implied by a target P/E = target P/E × EPS.
Frequently asked questions
What is a good P/E ratio?
It depends on the sector, growth and interest rates; there is no universal good value.
What is the difference between trailing and forward P/E?
Trailing uses past earnings; forward uses estimated future earnings.
Can P/E be negative?
If earnings are negative, the ratio is not meaningful.
How is P/E related to earnings yield?
Earnings yield is the inverse of P/E.
Does a high P/E mean a stock is overvalued?
Not necessarily; it may reflect growth expectations.
Is this investment advice?
No. It is a basic calculation for learning.