Price-to-Earnings (P/E) Calculator
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P/E Ratio21.43x
Earnings Yield4.67%
PEG Ratio1.79
The Price-to-Earnings (P/E) Calculator measures how many dollars investors pay for each dollar of a company earnings. Enter the share price and earnings per share to get the trailing P/E multiple, then add an expected growth rate to derive the PEG ratio and the earnings yield. These three numbers together help you judge whether a stock looks cheap, fairly valued, or expensive relative to its profits and growth.
Formula
P/E = price / EPS; earningsYield = EPS / price × 100; PEG = P/E / growthRate
- price
- Current market price per share
- EPS
- Earnings per share over the trailing period
- growthRate
- Expected annual EPS growth (percent, e.g. 12 for 12%)
How it works
- Enter the current share price and the company earnings per share (EPS); the calculator divides price by EPS to produce the P/E ratio.
- It also inverts that figure into an earnings yield (EPS divided by price) so you can compare a stock to bond yields on a like-for-like percentage basis.
- Type an annual EPS growth rate and the tool divides the P/E by that growth figure to give the PEG ratio, which contextualizes the multiple against expected growth.
Worked example
A stock trades at $150 with $7 of earnings per share and an expected 12% annual growth rate.
- P/E = 150 ÷ 7 = 21.43.
- Earnings yield = 7 ÷ 150 × 100 = 4.67%.
- PEG = 21.43 ÷ 12 = 1.79.
P/E of 21.43x, an earnings yield of 4.67%, and a PEG ratio of 1.79.
Frequently asked questions
- What is considered a good P/E ratio?
- There is no universal threshold. Historically the broad market has averaged a P/E in the mid-teens to low-twenties. A figure well above sector peers can signal high growth expectations or overvaluation, while a low one may indicate value or distress.
- How does the PEG ratio improve on the P/E ratio?
- PEG divides the P/E by the expected growth rate, so a high multiple justified by fast growth scores better than the same multiple on a stagnant company. A PEG near 1.0 is often treated as a rough fair-value benchmark.
- What does earnings yield tell me?
- Earnings yield is the inverse of the P/E expressed as a percentage. It lets you compare a stock directly with the interest rate on a bond, helping you weigh the relative attractiveness of equities versus fixed income.
- Why does the calculator require positive earnings?
- The P/E ratio is undefined or meaningless when a company has zero or negative earnings, so the tool requires a positive EPS. For unprofitable firms, analysts use alternatives such as price-to-sales instead.