— Stock Market
P/E Ratio Calculator
Calculate a stock’s P/E ratio from price and EPS, or market cap and net income. See earnings yield, forward P/E, PEG, and comparison with an industry average to judge whether valuation looks rich or cheap.
P/E ratio
20
- Earnings yield
- 5%
Try: P/E from price & EPS, With PEG (15% growth), Forward + vs industry, From market cap & income
— P/E measures side by side
| Measure | P/E | Earnings yield |
|---|---|---|
| P/E (trailing) | 20 | 5% |
— P/E vs forward, industry and CAPE
Download— How it works
P/E = price ÷ EPS (or market cap ÷ net income). Earnings yield = EPS ÷ price = 1 ÷ P/E. PEG = P/E ÷ EPS growth %. Forward P/E = price ÷ projected EPS. CAPE = price ÷ 10-year average inflation-adjusted EPS.
P/E and earnings yield
The P/E ratio is the share price divided by earnings per share — or, at the company level, market cap divided by net income (they’re the same thing). A P/E of 20 means you’re paying 20 times one year’s earnings, or, flipped over, earning a 5% yield on that price. That earnings yield (1 ÷ P/E) is the easiest way to compare a stock against a bond: a 5% earnings yield versus a 4% bond, say. A high P/E means the market expects growth; a low one can mean value — or trouble.
Worked example — $100 price, $5 EPS: P/E = 100 ÷ 5 = 20; earnings yield = 5 ÷ 100 = 5%. The same comes from a $1 billion market cap on $50 million of net income: 1,000 ÷ 50 = 20.
PEG, forward P/E and CAPE
A bare P/E ignores growth, which is why the PEG ratio divides it by the earnings growth rate: a P/E of 20 on 20% growth is a PEG of 1 — often taken as “fairly priced” — while below 1 is cheap for the growth and above 2 is expensive. The forward P/E uses projected rather than past earnings, and sits below the trailing P/E when earnings are expected to rise. CAPE (the Shiller P/E) divides price by a 10-year average of inflation-adjusted earnings, smoothing out the boom-and-bust of a single year — useful for judging whole markets.
Relative valuation, and the caveats
A P/E only means something in context. Enter an industry or peer average and the calculator shows whether the stock trades at a premium or discount to its sector — a fast-growing firm may deserve a premium, a struggling one a discount. But P/E has real limits: it’s meaningless for loss-making companies (negative earnings), distorted by one-off items and accounting choices, and not comparable across very different industries. Use it alongside growth, debt and cash flow — and remember this is an arithmetic tool, not investment advice.
— Reader questions
How do I calculate the P/E ratio?
Divide the share price by earnings per share. A $100 stock with $5 EPS has a P/E of 20. At the company level it’s market cap ÷ net income, which gives the same number.
What is a good P/E ratio?
It depends on growth and sector — there’s no universal “good” number. Compare it to the company’s growth (via PEG), its own history, and its industry average. A high P/E demands high growth to justify it; a low P/E may be value or a warning.
What is the PEG ratio?
P/E divided by the earnings growth rate. A PEG around 1 is often considered fair, below 1 cheap for the growth, and above 2 expensive. It’s a quick way to weigh price against how fast earnings are growing.
What’s the difference between trailing and forward P/E?
Trailing P/E uses the last 12 months’ actual EPS; forward P/E uses projected future EPS. Forward is lower than trailing when earnings are expected to grow, and reflects expectations rather than history.
What is CAPE or the Shiller P/E?
Price divided by the average inflation-adjusted earnings over 10 years. By smoothing a full economic cycle, it avoids the distortion of one unusually good or bad year — it’s mainly used to gauge whether a whole market is expensive.