About the P/E Ratio Calculator
This P/E ratio calculator measures how much investors are paying for each dollar of a company’s earnings. Enter the share price and earnings per share (EPS) — or net income and shares outstanding if you do not have EPS — and it returns the trailing price-to-earnings ratio and the earnings yield. Add next year’s expected EPS and the expected earnings growth rate to get the forward P/E and the PEG ratio.
It is useful for comparing stocks within the same industry, checking whether a share looks expensive against its own history or the market, and quickly estimating a price at a “normal” multiple. Enter a benchmark P/E, such as a sector average, to see the implied price and whether the stock trades at a premium or discount.
P/E ratios are only meaningful when earnings are positive, and they differ widely between industries: fast-growing technology companies often trade at far higher multiples than banks or utilities. Use P/E alongside cash flow, debt and growth measures rather than on its own.
With the default inputs, the p/e ratio (trailing) is 25 x. Change any value above to recalculate instantly.
How to use the p/e ratio calculator
- 1Enter the current share price.
- 2Enter trailing 12-month EPS, or switch to net income and shares outstanding.
- 3Add next year’s expected EPS and the expected growth rate for forward P/E and PEG.
- 4Enter a benchmark P/E such as the sector average.
- 5Compare the P/E, PEG and implied price to judge whether the stock looks cheap or expensive.
Formula and method
The trailing P/E divides the current share price by earnings per share over the last 12 months. If you enter net income and shares instead, EPS is net income ÷ shares outstanding. The forward P/E uses expected earnings for the next 12 months, so a forward P/E below the trailing P/E implies analysts expect earnings to grow.
The PEG ratio divides the P/E by the expected annual EPS growth rate expressed as a whole number (12% growth → 12), putting fast- and slow-growing companies on a similar footing. Earnings yield is the inverse of P/E and can be compared with bond yields. The benchmark price multiplies EPS by a reference P/E to show what the stock would cost at that multiple.
- EPS
- Earnings per share over the last 12 months
- Forward EPS
- Expected EPS over the next 12 months
- Growth %
- Expected annual EPS growth rate, as a whole number
Worked examples
$150 stock earning $6 a share
A $150 share price divided by $6 of EPS gives a P/E of 25 and an earnings yield of 4%. With $6.90 of expected EPS the forward P/E is 21.7. Dividing 25 by 12% growth gives a PEG of about 2.08. At a 20x sector multiple the stock would be $120, so it trades at a 25% premium.
Using net income and shares outstanding
$1.2B of net income spread over 400M shares is $3 of EPS. At $42 the P/E is 14 and the earnings yield about 7.1%. Against a 15x sector multiple the stock would be worth $45, so it trades about 6.7% below the benchmark.
High-growth company
A P/E of 60 looks very expensive, but with 35% expected earnings growth the PEG is about 1.7, and the forward P/E drops to about 42.9 if EPS reaches $7. At a 30x multiple the price would be $150, half the current price.
Frequently asked questions
What is a good P/E ratio?+
There is no single good P/E. The long-run average for the S&P 500 is roughly 15–20, but growth sectors routinely trade higher and mature sectors lower. Compare a stock with its peers, its own history and its growth rate.
What is the difference between trailing and forward P/E?+
Trailing P/E uses actual earnings from the last 12 months; forward P/E uses expected earnings for the next 12 months. Forward P/E reflects expectations and can be wrong if forecasts miss.
What does the PEG ratio tell you?+
PEG divides the P/E by the expected earnings growth rate. A PEG around 1 is often seen as fairly valued, below 1 as potentially cheap relative to growth, and above 2 as expensive — though growth forecasts are uncertain.
Why can’t P/E be calculated with negative earnings?+
If a company loses money, dividing the price by a negative EPS gives a negative number that has no useful meaning. Analysts use price-to-sales, EV/EBITDA or forward earnings for unprofitable companies instead.
What is earnings yield?+
Earnings yield is EPS divided by price — the inverse of the P/E. A P/E of 25 is a 4% earnings yield. It is handy for comparing stocks with bond yields or the return you require.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.