P/E Ratio Calculator

The price-to-earnings (P/E) ratio is a widely used valuation metric: it shows how much investors are paying for each dollar of a company's annual earnings. A P/E of 20 means the stock trades at 20 times its earnings, or equivalently, that it would take 20 years of current earnings to equal the purchase price.

This calculator also shows the earnings yield, the P/E ratio's inverse, expressed as a percentage, which makes it easier to compare a stock's earnings power against bond yields or other percentage-based benchmarks.

How does this calculator work?

Enter the stock's current price and its annual earnings per share (EPS), either trailing twelve months for a standard P/E or forward estimated EPS for a forward P/E.

The calculator divides price by EPS to get the P/E ratio, and inverts that to show the earnings yield.

Earnings yield, the P/E flipped upside down, puts a stock on the same footing as a bond's yield or a dividend yield. Because a multiple only means something in context, it is best read next to a stock's total return history and, for income names, its reinvested-dividend potential.

Worked example

A stock trading at $150 with $6.00 in annual EPS.

Stock price

$150

Annual EPS

$6.00

P/E ratio

25.00

Earnings yield

4.00%

How the numbers work

$150 divided by $6.00 EPS gives a P/E of 25, meaning investors are paying $25 for every $1 of the company's annual earnings.

The earnings yield, 1 divided by 25, is 4%. That's a useful comparison point against a bond yield: all else equal, an investor could think of the stock as offering a 4% earnings return on the purchase price, though unlike a bond coupon, that earnings figure can grow, shrink, or not translate directly into cash paid to shareholders.

A P/E ratio is only meaningful in context: compared against the company's own historical range, its industry peers, or the broader market. A P/E of 25 might be expensive for a slow-growing utility and cheap for a fast-growing technology company, which is exactly the gap the PEG ratio is built to address.