Finance & Loan
PE Ratio Calculator
Work out a price-to-earnings ratio, or run it backwards to find the share price or earnings the ratio implies.
PE Ratio Calculator
About the PE Ratio Calculator
The price-to-earnings ratio divides a company's share price by its earnings per share. It answers a simple question: how much are you paying for each unit of profit? A PE of 20 means the market is charging £20 for every £1 of annual earnings.
This calculator solves in any direction. Give it price and EPS to get the PE; price and PE to get the implied EPS; or EPS and PE to get the price the ratio implies. If you have company-level figures rather than per-share ones, enter net income and share count and it derives EPS for you.
It also reports the earnings yield, which is simply the PE inverted and expressed as a percentage — a form that compares much more naturally against bond yields and interest rates.
How to use the PE Ratio Calculator
- Choose what you want to work out — the calculator hides whichever field it is solving for.
- Enter the share price as currently quoted.
- Enter the earnings per share. If you only have company totals, divide net income by shares outstanding.
- Select Calculate. The earnings yield shown is simply the PE ratio inverted.
- A negative EPS is flagged rather than shown as a ratio — a loss-making company has no meaningful PE.
The PE ratio formula
PE = share price ÷ earnings per share
EPS = net income ÷ shares outstanding
Earnings yield = (1 ÷ PE) × 100
PEG = PE ÷ annual earnings growth rate
Worked example
A company with net income of £500 million and 200 million shares, trading at £45.
EPS = 500m ÷ 200m = £2.50
PE = 45 ÷ 2.50 = 18
PE 18 — an earnings yield of 5.6%
Read it two ways: you are paying £18 for each £1 of annual profit, or the company earns 5.6% a year on what you paid. The second framing is the one to hold next to a savings rate or a bond yield.
How to calculate PE ratio step by step
- Find the share price. Use the latest market price.
- Find earnings per share. Take the last 12 months of net income and divide it by the number of shares. Most company reports also print EPS directly.
- Divide price by EPS. The answer is the price per earnings — the PE ratio.
Example: a stock at $60 with EPS of $4 has a PE of 60 ÷ 4 = 15. You pay $15 for each $1 of yearly profit. This calculator does all three steps, and it works backwards if you know the PE and need the price.
What counts as a good PE ratio?
There is no universal answer, and the question is nearly meaningless without a comparison. A PE is only informative against something — the same company's history, its direct competitors, or its sector.
| PE range | Often described as | The catch |
|---|---|---|
| Under 10 | Cheap | Or the market expects earnings to fall |
| 10 – 20 | Moderate | Typical of mature, stable businesses |
| 20 – 30 | Expensive | Or growing fast enough to justify it |
| Over 30 | Very expensive | Pricing in substantial future growth |
A low PE is not automatically a bargain. It frequently means the market expects earnings to decline — the so-called value trap. A high PE is not automatically overpriced either; fast-growing companies routinely trade at high multiples that later look cheap. The ratio raises a question; it does not answer one.
Sector norms differ enormously. Utilities and banks have historically traded at low multiples; software and pharmaceuticals at high ones. Comparing a bank's PE to a software company's tells you almost nothing.
Trailing and forward PE
- Trailing PE uses the last twelve months of reported earnings. It is factual, auditable, and backward-looking.
- Forward PE uses forecast earnings for the coming year. It is more relevant to what you are buying, and it depends entirely on analyst estimates being right.
Forward PE is usually the lower of the two, because forecasts generally assume growth. When forward PE sits far below trailing, the market is expecting a sharp earnings rise — and the whole valuation rests on that expectation holding.
Always check which one a published figure refers to. Sources rarely label it clearly, and the two can differ by a third.
Negative and missing PE ratios
If a company loses money, EPS is negative and the PE is mathematically negative — but a negative PE conveys no useful information, so most data providers simply show "n/a" or leave it blank.
This is common among early-stage and high-growth companies that are deliberately unprofitable while they expand. For those, investors turn to other measures such as price-to-sales or enterprise value multiples. If your calculation returns a negative PE, the sensible reading is "this ratio does not apply here" rather than "this is a very cheap company".
Earnings yield calculation, and why it is worth knowing
Earnings yield inverts the PE so it reads like an interest rate. A PE of 18 becomes a 5.6% yield; a PE of 25 becomes 4%.
That framing makes cross-asset comparison natural. If a government bond yields 4.5% and a stock's earnings yield is 4%, you are accepting a lower return from the riskier asset in exchange for expected growth. Whether that trade is sensible is a judgement — but the comparison is only visible once you invert the ratio.
PEG ratio formula: how to calculate the PEG ratio
PEG divides the PE by the expected annual earnings growth rate, attempting to price growth into the comparison. A PE of 30 on a company growing 30% a year gives a PEG of 1.0; the same PE on a company growing 10% gives 3.0.
A PEG near 1 is conventionally treated as fair value, though this is a rule of thumb with no theoretical backing. It also inherits every weakness of the growth forecast it depends on — and growth forecasts are frequently wrong.
PE ratios are percentage arithmetic underneath — the percentage calculator handles the growth and change calculations that feed into PEG, and the compound interest calculator shows what a given annual growth rate compounds to over time.
None of this is investment advice. A PE ratio is one input among many, and no single ratio identifies a good investment. Company accounts can be presented in ways that flatter earnings, one-off items distort a single year, and past performance does not predict future returns. If you are investing meaningful money, take advice from a regulated adviser.
This is a calculation aid, not financial advice. It does not know your circumstances, and nothing here is a quote, an offer or a recommendation. Rates, fees, tax rules and regulations change constantly and differ by country and provider. Where the amounts matter to you, take advice from a qualified professional who knows your situation.
PE ratio formulas cheat sheet
Every formula on this page comes from one idea: price divided by earnings. Rearrange it and you can solve for any missing number.
| To find | Formula | Example |
|---|---|---|
| PE ratio | Share price ÷ EPS | $60 ÷ $4 = 15 |
| Share price | PE × EPS | 15 × $4 = $60 |
| EPS | Share price ÷ PE | $60 ÷ 15 = $4 |
| Earnings yield | EPS ÷ price × 100 | $4 ÷ $60 = 6.7% |
| PEG ratio | PE ÷ yearly EPS growth (%) | 15 ÷ 10 = 1.5 |
How to calculate price per share from PE
Pick Share price (from EPS and PE) above. Enter the earnings per share and a PE ratio. The answer is the price the market would pay at that multiple.
This is handy for a quick valuation check. Suppose a company earns $3.20 a share and similar firms trade at a PE of 18. 18 × $3.20 = $57.60. If the stock trades at $45, it is cheaper than its peers on this measure — though there may be a reason for that.
How to calculate forward PE ratio
Forward PE uses expected earnings for the next 12 months instead of past earnings.
Forward PE = current share price ÷ forecast EPS for the next 12 months
A stock at $80 with forecast EPS of $5 has a forward PE of 16. If last year's EPS was $4, its trailing PE is 20. A forward PE below the trailing PE means analysts expect earnings to grow. Forecasts can be wrong, so treat forward PE with care.
Other ways to use this calculator
- EPS calculator — choose the EPS option to find earnings per share from price and PE.
- Stock valuation calculator — the PE formula gives a quick, rough valuation against peers.
Frequently asked questions
It depends entirely on the sector and the comparison. Broadly, under 10 reads as cheap, 10–20 as moderate, 20–30 as expensive, and above 30 as pricing in substantial growth. But utilities and banks have always traded lower than software and pharmaceuticals, so a PE only means something against the same company's history or its direct competitors. On its own it is close to meaningless.
That the company is making a loss, so earnings per share is negative. Most data providers show "n/a" rather than a negative figure, because it carries no useful information. It is common among early-stage and high-growth companies that are deliberately unprofitable while expanding. For those, price-to-sales or enterprise value multiples are used instead.
Trailing PE uses the last twelve months of reported earnings — factual and auditable, but backward-looking. Forward PE uses forecast earnings for the year ahead, which is more relevant to what you are buying but depends on analyst estimates being right. Forward is usually lower, since forecasts assume growth. Always check which one a published figure means; they can differ by a third.
Earnings yield is the PE inverted and shown as a percentage — a PE of 18 gives 5.6%. Because it reads like an interest rate, it compares naturally against bond yields and savings rates. If bonds yield 4.5% and a stock's earnings yield is 4%, you are taking more risk for a lower current return in exchange for expected growth. That trade-off is only visible once you invert the ratio.
PE ratio = share price ÷ earnings per share (EPS). A stock at $60 with EPS of $4 has a PE of 15, meaning investors pay $15 for each $1 of yearly earnings.
Divide the PE ratio by the expected yearly earnings growth rate, written as a whole number. A PE of 15 with 10% growth gives a PEG of 1.5. A PEG near 1 is often seen as fair value.
Divide the PE ratio by the expected yearly earnings growth rate, written as a whole number. A stock with a PE of 24 and 12% expected growth has a PEG of 24 divided by 12, which is 2.0. A PEG near 1 is often treated as fair value.
PE ratio = share price divided by earnings per share. A $60 share with $4 of EPS has a PE of 15. Using company totals, divide market value by net income for the same answer.
Sources and further reading
- US SEC Investor.gov — How to read a financial statement — EPS, earnings and what company filings report
- SEC EDGAR — Company filings database — where reported earnings figures come from
- Financial Conduct Authority — Investing basics — UK guidance and the limits of any single ratio
- CFA Institute — Equity valuation resources — how PE, PEG and earnings yield are used in practice