Price to Earnings Calculator
Calculate P/E ratio to evaluate stock valuation and investment opportunities
Calculate P/E Ratio
Current market price per share
Earnings per share over the last 12 months
P/E Ratio Results
Valuation Assessment
Moderate valuation - compare with industry peers
Investment Insight
Investors are paying $13.89 for every $1 of annual earnings.
Calculation
Formula: P/E Ratio = Stock Price ÷ Earnings per Share
Calculation: $25 ÷ $1.8 = 13.89x
Implied Stock Prices at Different P/E Multiples
Example Calculation
Sample Company
Stock Price: $25.00
Earnings per Share: $1.80
Industry: Technology
P/E Calculation
P/E = $25.00 ÷ $1.80
P/E = 13.89x
Reasonable valuation for tech sector
P/E Ratio Guide
Low P/E (< 10x)
Potentially undervalued or low growth
Reasonable P/E (10-15x)
Fair valuation, compare with peers
High P/E (15-25x)
High growth expectations
Very High P/E (> 25x)
Extremely high growth or overvalued
Note: Always compare P/E ratios within the same industry for meaningful analysis.
Understanding Price-to-Earnings Ratio
What is P/E Ratio?
The Price-to-Earnings (P/E) ratio is a financial metric that measures a company's stock price relative to its earnings per share. It shows how much investors are willing to pay for each dollar of annual earnings.
Why is it Important?
- •Compares stock valuations across companies and industries
- •Identifies potentially overvalued or undervalued stocks
- •Indicates market sentiment and growth expectations
- •Helps in investment decision-making process
P/E Ratio Formula
P/E Ratio = Stock Price ÷ Earnings per Share
Key Considerations
- •Use trailing twelve months (TTM) earnings for accuracy
- •Compare P/E ratios within the same industry
- •Consider forward P/E based on estimated future earnings
- •Account for company growth rate and market conditions