Price-to-Earnings (P/E) Ratio Calculator
Divide share price by earnings per share to get the P/E ratio — plus the earnings yield it implies.
How it works
P/E = share price ÷ earnings per share · Earnings yield = EPS ÷ price × 100
The price-to-earnings ratio tells you how many dollars investors are paying for each dollar of a company’s annual earnings — a rough gauge of how expensive a stock is. Its reciprocal, the earnings yield, expresses the same relationship as a percentage that can be compared to bond yields. A high P/E signals that the market expects strong growth (or that the stock is pricey); a low P/E can mean value or trouble, so it is only meaningful against peers and history.
Worked example
A stock trading at $150 with earnings of $6 per share has a P/E of 150 ÷ 6 = 25×. Flipping it, the earnings yield is 6 ÷ 150 = 4%, meaning at today’s price the company earns 4 cents a year for every dollar invested.
Frequently asked questions
What is a good P/E ratio?
There is no universal figure — it depends on the industry, growth rate and interest rates. Compare a company’s P/E to its sector peers and its own history rather than to a fixed benchmark.
What is trailing versus forward P/E?
Trailing P/E uses the past 12 months of actual earnings; forward P/E uses analysts’ estimates for the next 12 months. Forward P/E is usually lower for a growing company because expected earnings are higher.
Why can’t P/E be used with negative earnings?
A company losing money has negative or zero EPS, which makes the ratio negative or undefined and meaningless. Investors switch to other measures such as price-to-sales in that case.
Related calculators
Educational estimate, not investment advice.