Price to Earnings Ratio Calculator
The price to earnings ratio, usually shortened to P/E, is the most quoted way to gauge how expensive a stock is relative to its profits. It answers a simple question: how many dollars are investors paying for each dollar the company earns in a year? You get it by dividing the share price by earnings per share, and this calculator does that instantly while also showing the earnings yield, which is the same relationship flipped into a percentage. A high P/E can mean the market expects strong future growth, or it can flag an overvalued stock, so the figure is most useful when you compare it against close competitors and the company's own history rather than reading it in isolation. Enter a share price and an earnings per share figure to see both the ratio and the yield update at once. The calculation is purely arithmetic and matches the standard definition used by educators at the US Securities and Exchange Commission, whose Investor.gov site explains how to read valuation measures responsibly. Every number here is computed deterministically from the formula shown in full below, with a worked example that reconciles exactly to the default inputs so you can follow each step and trust the result.
The price to earnings ratio is share price / earnings per share. A $50 stock earning $2.50 per share trades at a P/E of 20.00x, an earnings yield of 5.00%.
Price to earnings ratio formula
P/E ratio = share price / earnings per share (EPS)
earnings yield (%) = EPS / share price x 100
EPS = annual net profit per share
earnings yield is the inverse of the P/E ratio
Divide the share price by earnings per share to get the P/E ratio. Flipping the same two numbers, earnings per share divided by price, then multiplied by 100, gives the earnings yield as a percentage. A higher P/E means a lower earnings yield, and the reverse.
Worked example
A stock trades at 50 per share and reported earnings per share of 2.50 over the last twelve months.
- P/E ratio = 50 / 2.50 = 20.00x
- Earnings yield = 2.50 / 50 = 0.05
- Earnings yield as a percentage = 0.05 x 100 = 5.00%
The stock has a P/E of 20.00x and an earnings yield of 5.00%, meaning investors pay 20 dollars for each dollar of annual profit. These are the calculator's default inputs, so the result above matches the widget exactly.
P/E ratio to earnings yield reference
Earnings yield is simply 1 divided by the P/E ratio, shown here as a percentage.
| P/E ratio | Earnings yield |
|---|---|
| 5x | 20.00% |
| 10x | 10.00% |
| 15x | 6.67% |
| 20x | 5.00% |
| 25x | 4.00% |
| 30x | 3.33% |
Valuation concepts: US Securities and Exchange Commission, Investor.gov.
Price to earnings ratio calculator: frequently asked questions
What is the price to earnings (P/E) ratio?
The price to earnings ratio compares a company's share price to its earnings per share. It tells you how much investors are paying for each dollar of annual profit. A P/E of 20 means the market is paying 20 dollars for every 1 dollar of yearly earnings. It is one of the most widely quoted valuation measures, useful for comparing similar companies in the same industry.
What is a good P/E ratio?
There is no single good P/E ratio. It depends on the industry, the company's growth rate and the broader market. Fast-growing companies often trade at higher P/E ratios because investors expect future earnings to rise, while mature or slow-growing companies tend to have lower ratios. The most useful comparison is against close competitors and the company's own historical range, not an absolute number.
What is earnings yield?
Earnings yield is the inverse of the P/E ratio, expressed as a percentage. It is earnings per share divided by the share price, times 100. A P/E of 20 equals an earnings yield of 5 percent. Earnings yield lets you compare a stock against bond yields and other percentage returns on a like-for-like basis, which is why some investors prefer it to the raw P/E figure.
What does a negative or very high P/E mean?
A negative P/E means the company reported a loss, so earnings per share is below zero and the ratio is not meaningful. A very high P/E can signal strong growth expectations, an unusually low earnings figure for the period, or an overvalued stock. Always check why the number is extreme before drawing a conclusion, and look at the underlying earnings trend.
What is the P/E ratio formula?
P/E ratio = share price divided by earnings per share (EPS). For example, a 50 dollar share price with EPS of 2.50 gives a P/E of 20. The trailing P/E uses the last twelve months of reported earnings, while the forward P/E uses analyst estimates of future earnings. This calculator uses whatever EPS figure you enter.
Official sources
- Investing concepts and how to read valuation measures: US Securities and Exchange Commission, Investor.gov. As at 24 June 2026.
Reviewed by the CalculatorHub team, edited by James Graham, 24 June 2026. See our methodology. This is general information, not financial, tax, legal or investment advice.