P/E Ratio Calculator
Find how many years of current earnings a stock's price represents. Enter the share price and earnings per share, or the company's market cap and net income, to get the P/E ratio, earnings yield and, with a growth estimate, the PEG ratio.
Annual EPS: trailing 12 months or a forward estimate.
For the PEG ratio.
E.g. industry or market average, for an implied price.
How to use the P/E Ratio Calculator
- Choose your inputs: per-share figures (price and EPS) or company totals (market cap and net income).
- Enter the price and earnings. Use trailing 12-month EPS for trailing P/E, or next year's estimate for forward P/E.
- Add the expected growth rate of earnings per year to get the PEG ratio (optional).
- Enter a comparison P/E, such as the industry or market average, to see the implied share price (optional).
- Read the results and use the multiples table to see what the stock would be worth at other P/E levels.
P/E ratio formulas
- P/E ratio = share price ÷ earnings per share = market capitalization ÷ net income
- Earnings yield = EPS ÷ share price × 100 = 100 ÷ P/E
- PEG ratio = P/E ÷ expected annual EPS growth rate (in %)
- Implied price = chosen P/E × EPS
Example: a share trades at $120 and earned $6 per share over the last year. P/E = 120 ÷ 6 = 20, earnings yield = 6 ÷ 120 = 5%. If earnings are expected to grow 15% a year, PEG = 20 ÷ 15 = 1.33. At an industry P/E of 18 the implied price would be 18 × 6 = $108.
P/E ratio and earnings yield reference
| P/E ratio | Earnings yield | Years of current earnings to equal the price |
|---|---|---|
| 5 | 20.00% | 5 |
| 10 | 10.00% | 10 |
| 15 | 6.67% | 15 |
| 20 | 5.00% | 20 |
| 25 | 4.00% | 25 |
| 30 | 3.33% | 30 |
| 40 | 2.50% | 40 |
| 50 | 2.00% | 50 |
P/E is a quick comparison tool, not a full valuation. One-off gains or charges can distort a single year's EPS, companies in different industries have very different typical P/Es, and cyclical businesses often look cheapest at the peak of their earnings. Look at several years of earnings and at cash flow too.
Frequently asked questions
How do you calculate the P/E ratio?
P/E ratio = share price ÷ earnings per share. A stock at $120 with EPS of $6 has a P/E of 20, meaning investors pay $20 for each $1 of annual earnings. Using company totals gives the same answer: market capitalization ÷ net income.
What is a good P/E ratio?
There is no single good value. P/E depends on the industry, growth, interest rates and risk. Fast-growing companies often trade at high P/Es, while slow-growing or cyclical companies trade at lower ones. Compare a stock's P/E with its own history and with similar companies rather than with a fixed number.
What is earnings yield?
Earnings yield is the inverse of P/E: EPS ÷ price × 100. A P/E of 20 equals an earnings yield of 5%. It is handy for comparing stocks with bond yields or with each other, and it still works when earnings are negative, unlike the P/E ratio.
What is the PEG ratio?
PEG = P/E ÷ expected annual EPS growth rate (in percent). A P/E of 20 with 15% growth gives a PEG of 1.33. A PEG near 1 is often read as fair value for the growth, below 1 as cheap and above 1 as expensive, although growth estimates are uncertain.
What does a negative P/E mean?
If a company has a loss, its EPS is negative and the P/E ratio is not meaningful; most data providers show it as N/A. The calculator reports the negative earnings yield instead, which tells you the loss as a percentage of the price.
What is the difference between trailing and forward P/E?
Trailing P/E uses the last 12 months of reported earnings, so it is based on actual results. Forward P/E uses analysts' estimates of the next 12 months' earnings. The formula is the same; only the EPS figure you enter changes.
Should I use basic or diluted EPS?
Most financial sites calculate P/E with diluted EPS, which accounts for options, convertible securities and other shares that could be issued. Use the same type of EPS when comparing companies.