P/E Ratio Calculator
The price-to-earnings ratio from a share price and earnings per share, or EPS worked out from net income, preferred dividends and shares, with the earnings yield and PEG.
Result
P/E ratio: 18.51
Arithmetic on the price and earnings you enter. No fair or typical P/E is given, because it depends on the company and the market.
- Earnings per share
- $3.75
- Earnings yield
- 5.4027%
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Results are arithmetic estimates based on the assumptions you enter, not accounting, tax, investment or lending advice. Forecasts can be wrong and important decisions should be checked with a qualified adviser. Read the full disclaimer
How to use the P/E Ratio Calculator
- Enter the share price.
- Enter earnings per share, or choose to work it out from net income, preferred dividends and the weighted average number of common shares.
- Optionally enter an expected yearly earnings growth rate for the PEG ratio.
The formulas
EPS = (net income − preferred dividends) ÷ weighted average common sharesP/E = share price ÷ EPSearnings yield = EPS ÷ share pricePEG = P/E ÷ expected growth rate (in percent)This is basic EPS. Companies also report diluted EPS, which counts shares that options and convertible securities could create; it is lower, so a P/E on diluted EPS is higher.
Trailing and forward
A P/E on the last twelve months of reported earnings is trailing; one on forecast earnings is forward. The arithmetic is the same, so the page works for either; say which you used when you compare.
What the diagram shows
The share price beside earnings per share. The P/E is the number of times the earnings bar fits into the price bar.
With your numbers
- EPS = ($35,000.00 − $5,000.00) ÷ 8,000 = $3.75
- P/E = $69.41 ÷ $3.75 = 18.51
- Earnings yield = $3.75 ÷ $69.41 = 5.4%
Quick reference
Arithmetic on the price and earnings you enter. No fair or typical P/E is given, because it depends on the company and the market.
| Example | P/E ratio |
|---|---|
| 69.41 on EPS of 3.75 | 18.51 |
| From 35,000 profit, 5,000 preferred, 8,000 shares | 18.51 |
| 150 on EPS of 6, growth 12% | 25 |
| 20 on EPS of 2 | 10 |
| A loss: 1,000,000 on 500,000 shares | |
| 45 on EPS of 0.90 | 50 |
Common questions about the P/E Ratio Calculator
- What does a P/E ratio tell me?
- How many years of current earnings the share price represents: a P/E of 18.5 means buyers pay 18.50 for each 1 of yearly earnings per share. It is a way to compare prices across companies of different sizes, not a measure of whether a share is cheap.
- What is a good P/E ratio?
- This page does not give one. P/E ratios differ widely by industry, growth, interest rates and how cyclical the earnings are, and a low P/E can mean the market expects earnings to fall. Compare a company with its own history and with close competitors, knowing why the numbers differ.
- Why is there no P/E for a company making a loss?
- Dividing a price by negative earnings gives a negative ratio that has no sensible reading, and near-zero earnings give a huge one. The page leaves the P/E blank and shows the earnings yield instead, EPS divided by price, which stays meaningful: a 2 loss per share on a 20 price is −10%.
- Why subtract preferred dividends?
- Earnings per share measures what is earned for each common share. Preferred shareholders are paid first, so their dividends are taken out before dividing by the common shares.
- What is the PEG ratio?
- The P/E divided by the expected yearly growth rate in percent: a P/E of 25 with 12% growth gives 2.08. It tries to allow for growth when comparing P/E ratios, and it is only as good as the growth estimate you enter.