The P/E ratio tells you how much investors pay for each dollar of earnings. The S&P 500 has averaged around 15–20× over the long term. High P/Es usually reflect expected growth; low P/Es can mean value or trouble.
How to use the Price to Earnings Ratio Calculator
- Share price
- Earnings per share (EPS)
- Target P/E
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the share price and earnings per share (trailing or forward), and optionally a target P/E.
Tips
- Take figures from the same financial statements and the same fiscal year.
- Compare ratios with companies in the same industry, not across industries.
- Use several valuation measures together; no single ratio tells the whole story.
- Market prices change every second – refresh the share price before you rely on a result.
Common mistakes to avoid
- Mixing per-share figures with company totals.
- Using trailing earnings for one company and forward earnings for another.
- Forgetting dilution from options and convertible securities.
Inputs explained
| Field | What to enter |
|---|---|
| Share price | Amount in your currency |
| Earnings per share (EPS) | Amount in your currency |
| Target P/E | A number |
What each result means
- Earnings yield = [Earnings per share (EPS)]÷[Share price]×100
- Price at the target P/E = [Target P÷E]×[Earnings per share (EPS)]
Example values
How the main result changes when Share price changes and everything else stays at the example values above:
| Share price | P/E ratio |
|---|---|
| 60 | 10 |
| 90 | 15 |
| 120 | 20 |
| 150 | 25 |
| 180 | 30 |
| 240 | 40 |
Formula
P/E = share price ÷ earnings per shareEarnings yield = EPS ÷ pricePrice at target P/E = target P/E × EPSWorked example
Inputs — Share price: $120; Earnings per share (EPS): $6; Target P/E: 18.
Results — P/E ratio = 20; Earnings yield = 5 %; Price at the target P/E = $108.00.
Frequently asked questions
What is a good P/E ratio?
It depends on growth and industry; around 15–25 is typical for the S&P 500.
What is the difference between trailing and forward P/E?
Trailing uses the last 12 months of EPS; forward uses next year's estimate.
Why is P/E not meaningful for loss-makers?
Negative earnings give a negative or undefined P/E.
What formula does the Price to Earnings Ratio Calculator use?
P/E = share price ÷ earnings per share.