P/E ratio calculator — price-to-earnings and earnings yield

How to use the P/E ratio calculator

1. Enter the Share price.
2. Enter the Earnings per share (trailing 12 months). Negative values are allowed.
3. Choose the Currency.
4. Read P/E ratio, Earnings yield and the Reading line.

What it does and when to use it

The P/E ratio is one of the most quoted numbers in investing. It tells you how many times its yearly earnings a company’s share price represents. A P/E of 25 means buyers pay 25 for every 1 the company earned per share last year. A high P/E usually means the market expects strong growth; a low one can mean low expectations, a cheap share, or a business in trouble. The number starts a comparison; it does not settle one.

Use the calculator to check a P/E you have seen quoted, to work one out from a company’s results, or to compare two companies in the same sector on the same basis. It pairs well with the dividend yield calculator, which shows how much of the price comes back as cash each year, and the dividend payout ratio calculator, which shows how much of the earnings are paid out.

How it works

Investor.gov gives the calculation as the current stock price divided by the current earnings per share:

• P/E ratio = share price ÷ earnings per share
• Earnings yield = earnings per share ÷ share price × 100

If the EPS is zero or below, the calculator does not return a P/E. It warns that the ratio is not meaningful and shows the earnings yield, which will be zero or negative.

Worked examples

These figures come from the calculator’s own function.

A ₹200 share earning ₹10. P/E ratio 20, earnings yield 5%. The reading says investors pay 20 for every 1 of yearly earnings.

A $150 share earning $6. P/E ratio 25, earnings yield 4%.

A loss-making company. Price $50, EPS −$2. The calculator warns that with zero or negative earnings the P/E ratio is not meaningful, and gives an earnings yield of −4%.

Comparing the first two: the $150 share costs more per unit of earnings (25 against 20), so its earnings yield is lower (4% against 5%).

Limits and tips

• Trailing earnings look back. A P/E based on last year’s EPS can mislead when profits are changing fast. Analysts’ forward P/E uses expected earnings instead; this calculator uses whatever EPS you enter.
• One-off items such as a large asset sale can inflate EPS for a year and make the P/E look low.
• Compare like with like. Fast-growing and slow-growing businesses are priced very differently, so compare companies in the same industry.
• Not a buy or sell signal on its own.
• Runs in your browser.