Price-to-Earnings Calculator (P/E Ratio)
The P/E ratio is the most widely quoted stock valuation metric. Enter the current share price and earnings per share (EPS) to get the P/E multiple, earnings yield and how the number compares to long-run market averages.
High — growth premium priced in
- 1
P/E ratio
150 ÷ 7.5 = 20 - 2
Earnings yield
7.5 ÷ 150 × 100 = 5 %The P/E reciprocal — useful for comparing equities directly with bond yields.
How does this calculator work?
P/E = stock price ÷ EPS. A $150 stock with $7.50 EPS has a P/E of 20× and an earnings yield of 6.67%. The long-run S&P 500 average is about 16–18×, but appropriate multiples vary by sector and interest-rate environment. The P/E is a quick relative-value signal, not an absolute buy or sell trigger.
Formula
How this is calculated
The Price-to-Earnings (P/E) ratio answers the question: "how many years of current earnings am I paying for one share?" A P/E of 20 means investors pay 20 times last year's earnings per share. The long-run arithmetic average P/E of the US S&P 500 index is roughly 16–18, providing a historical benchmark — though the appropriate level depends on interest rates, growth expectations and sector norms.
This calculator uses trailing twelve-month (TTM) EPS by default, which is found in a company's most recent annual or quarterly report (labelled "basic EPS" or "diluted EPS"). Diluted EPS is more conservative, as it assumes all convertible instruments are exercised. For forward P/E, simply enter the analysts' consensus EPS estimate for the next 12 months in the EPS field.
The earnings yield (EPS ÷ Price × 100%) is the P/E reciprocal. It expresses equity returns as a percentage, making equities directly comparable to bond yields — a useful framework for assessing relative attractiveness across asset classes.
Frequently asked questions
The S&P 500 long-run average P/E is roughly 16–18. Below 15 may indicate undervaluation; above 25–30 typically implies high growth expectations or overvaluation. These thresholds shift with interest rates — low rates support higher P/E multiples. Always compare within sector and against the stock's own history.
Trailing P/E uses actual reported EPS over the past 12 months. Forward P/E uses analysts' consensus EPS estimates for the next 12 months. Forward P/E is more forward-looking but relies on forecasts that may prove incorrect.
Yes, when EPS is negative (the company lost money). A negative P/E is not informative — investors in loss-making companies use other metrics such as Price/Sales, Price/Book, or EV/EBITDA instead.
Also known as
TG we-Calculate Editorial Team. (2026). Price-to-Earnings Calculator (P/E Ratio) [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/price-to-earnings-calculator
TG we-Calculate Editorial Team. "Price-to-Earnings Calculator (P/E Ratio)." TG we-Calculate. 2026. https://we-calculate.com/calculator/price-to-earnings-calculator.
TG we-Calculate Editorial Team, "Price-to-Earnings Calculator (P/E Ratio)," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/price-to-earnings-calculator
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