Price to Earnings Calculator

P/E ratio is the first number most investors check. A 50 share with 2.50 EPS = 20 P/E — you pay 20 for every 1 of current earnings. Below 15 is usually considered value territory; above 25 often reflects growth expectations. Earnings yield is the inverse — 20 P/E = 5% earnings yield — useful for comparing against bond yields.

Quick example

With share price of 50 and earnings per share of 2.5, the result is 20.00x. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Share Price and Earnings per Share (EPS).

What's happening under the hood

Price divided by EPS. Earnings yield = 1/PE × 100. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

Using this well

What this doesn't capture

Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. The number represents one scenario rather than a forecast.

Worked example

Suppose a company trades at a share price of 120 with earnings per share of 6. The P/E ratio calculates as 120 ÷ 6 = 20x. The earnings yield is 1 ÷ 20 × 100 = 5%. This tells you that at current earnings levels, the stock generates a 5% earnings yield — a figure that can be compared against bond yields or other investments to assess relative value.

Now suppose the same company reports higher earnings, lifting EPS to 8 while the share price remains 120. The P/E falls to 15x and the earnings yield rises to 6.67%. The ratio tightens without any change in stock price, purely because profitability increased.

Common uses

• Comparing valuation across companies in the same sector
• Assessing whether a stock price reflects current profitability or embeds growth expectations
• Screening for stocks trading below or above historical averages
• Converting P/E into an earnings yield for comparison with fixed-income returns

What the result does and does not show

This calculator shows the relationship between current share price and current annual earnings per share. It does not account for:

• Future growth or decline in earnings
• Debt levels, cash position, or capital structure
• Industry cyclicality or competitive position
• Quality of earnings or accounting treatments
• Dividend policy or capital returns

A low P/E ratio may indicate undervaluation—or signal deteriorating prospects. A high P/E may reflect justified growth expectations—or unsustainable pricing. The ratio is one snapshot among many data points.

For educational illustration

This calculator estimates P/E ratio and earnings yield based on the inputs provided. Results are illustrative and do not constitute financial analysis or advice. Always verify company financials from official sources and consider broader investment criteria.