P/E Ratio Calculator: Price-to-Earnings
The price-to-earnings ratio is the cornerstone of stock valuation. This calculator works two ways: enter a stock price and EPS directly, or derive EPS from a company's net income, preferred dividends, and shares outstanding. The calculator then returns the P/E ratio, earnings yield (the inverse of P/E, useful for comparing stocks to bond yields), and the PEG ratio if you supply an expected annual growth rate. All inputs are drawn from public SEC filings: net income and shares outstanding appear on the income statement and cover page of every 10-K and 10-Q. Preferred dividends come from the notes to financial statements. The calculator uses trailing (reported) figures by default. For a forward P/E, substitute analyst consensus EPS estimates in the EPS field. Compare the resulting P/E against sector peers rather than the overall market average, since capital-light technology businesses routinely trade at multiples that would look extreme for utilities or industrials.
Formulas
P/E ratio = Stock price / EPS
EPS = (Net income - Preferred dividends) / Weighted average diluted shares
Earnings yield = (1 / P/E) x 100%
PEG ratio = P/E / Annual EPS growth rate (%)
How to use this calculator
- Enter the current stock price per share.
- Enter EPS directly if you have it, or leave EPS blank and fill in net income, preferred dividends, and shares outstanding to have it calculated.
- Optionally enter an expected annual EPS growth rate to get the PEG ratio.
- Read the P/E ratio, earnings yield, and PEG ratio from the output panel.
Frequently asked questions
What does the P/E ratio mean?
The price-to-earnings ratio tells you how many dollars investors are paying for each dollar of annual earnings. A P/E of 20 means the stock costs 20 times its annual earnings per share. It is the most widely used valuation multiple in equity analysis.
Is a high or low P/E better?
It depends on context. A high P/E (above 25) often signals that investors expect strong future growth, but the stock may be expensive relative to current earnings. A low P/E (below 10) can indicate a bargain or a business with poor growth prospects. Always compare within the same industry.
What is the earnings yield?
Earnings yield is the inverse of the P/E ratio: EPS divided by stock price, expressed as a percentage. It lets you compare stock returns directly to bond yields. A stock with a P/E of 20 has an earnings yield of 5%, which you can weigh against the 10-year Treasury yield.
What is the PEG ratio?
The PEG ratio divides the P/E by the expected annual EPS growth rate. A PEG below 1.0 is often considered undervalued relative to growth; above 1.0 may signal overvaluation. It was popularised by Peter Lynch as a way to account for growth when comparing P/E ratios.
What is the difference between trailing and forward P/E?
Trailing P/E uses the actual EPS from the past 12 months. Forward P/E uses analyst estimates for the next 12 months. Trailing P/E is based on reported figures; forward P/E reflects expectations and can be significantly different if earnings are expected to grow or contract.
Official sources
- U.S. Securities and Exchange Commission EDGAR: Company filings search.
- SEC Investor Education: Financial analysis resources.
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.