P/E Ratio Calculator
The price-to-earnings (P/E) ratio compares a stock's price to its earnings and is the most common quick gauge of valuation. Enter a share price and earnings per share below to get the P/E ratio and earnings yield instantly. Everything runs in your browser; nothing you type is sent anywhere.
How the P/E Ratio Calculator Works
The formula is straightforward: P/E ratio = share price ÷ earnings per share. If a stock trades at $150 and has EPS of $5, its P/E ratio is 30. The calculator also shows the earnings yield, which is the inverse of the P/E: earnings yield = earnings per share ÷ share price, expressed as a percentage. EPS comes from a company's income statement — see our glossary definition of EPS explained.
What the P/E Ratio Tells You
The P/E ratio shows roughly how many dollars investors are paying for each dollar of a company's annual earnings. A high P/E implies the market expects strong future growth, while a low P/E can signal a bargain — or a company in trouble. Because norms differ so much between industries, P/E is most meaningful when you compare a stock against similar companies in its own sector rather than the market as a whole. For the full picture, read our guide to what is a P/E ratio.
The Limits of P/E
The P/E ratio is meaningless when a company has zero or negative earnings, since there is no positive profit to divide into the price. It can also be distorted by one-off items such as asset sales or write-downs that temporarily inflate or depress earnings. Treat P/E as a starting point and pair it with other measures — explore several in our guide to valuation metrics beyond P/E.
Frequently Asked Questions
Divide a stock's share price by its earnings per share (EPS). For example, a stock trading at $150 with EPS of $5 has a P/E ratio of 30, meaning investors are paying $30 for every $1 of annual earnings. This calculator also shows the earnings yield, which is EPS divided by price expressed as a percentage.
There is no universal good number. P/E ratios vary widely by industry and by how fast a company is expected to grow, so a high P/E is not automatically expensive and a low P/E is not automatically cheap. P/E is most useful when comparing similar companies in the same sector rather than across the whole market.
If a company has zero or negative earnings, it has no positive profit to divide into the price, so the P/E ratio is not meaningful and is usually shown as not applicable. That does not necessarily mean the company is a bad investment, but it does mean you need other measures, such as price-to-sales or price-to-book, to judge its valuation.
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