Interactive P/E Ratio Calculator

Calculate price-to-earnings ratio with step-by-step explanations and visual gauge. Professional tool for stock valuation and growth-adjusted PEG analysis.

Stock Details
Share Price
Current market price per share (e.g., $75)
Earnings Per Share (EPS)
Net income ÷ outstanding shares (e.g., $3)
Annual Earnings Growth Rate
Expected annual EPS growth rate (e.g., 10%)
Please enter valid positive values for all fields.
0 20 Low 25 Average 50+ High

P/E Ratio Formula

Understanding the calculation and valuation interpretation

Price-to-Earnings (P/E) Ratio Definition

The P/E ratio is calculated by dividing the share price by the earnings per share (EPS):

P/E Ratio = Share Price ÷ Earnings Per Share

Price/Earnings-to-Growth (PEG) Ratio Definition

The PEG ratio is calculated by dividing the P/E ratio by the annual earnings growth rate (in percentage):

PEG Ratio = P/E Ratio ÷ Annual Earnings Growth Rate

Interpretation Guide

  • P/E < 20: Low – The stock may be undervalued or have lower growth prospects
  • P/E 20–25: Average – The stock is aligned with the market average
  • P/E > 25: High – The stock may be overvalued or have high growth expectations
  • PEG ~1: Indicates fair valuation relative to growth; <1 suggests undervaluation, >1 suggests overvaluation
  • Trailing P/E: Uses historical EPS, more reliable but backward-looking
  • Forward P/E: Uses projected EPS, forward-looking but speculative

How to Use the Calculator

Simple steps for accurate stock valuation analysis

1

Enter Share Price

Input current market price of the stock

2

Enter EPS

Input earnings per share (trailing or forward)

3

Add Growth Rate

(Optional) Enter growth rate for PEG analysis

4

Get Analysis

View P/E ratio with valuation assessment and charts

Frequently Asked Questions

The price-to-earnings (P/E) ratio is a financial metric that measures a company’s stock valuation by dividing its share price by its earnings per share (EPS). It shows how much investors are willing to pay per dollar of earnings.

To calculate the P/E ratio: Obtain the current share price, obtain the EPS (trailing or forward), divide the share price by the EPS. Example: P/E = $75 ÷ $3 = 25.

The PEG ratio adjusts the P/E ratio for earnings growth by dividing P/E by the annual earnings growth rate. A PEG around 1 suggests fair valuation, below 1 may indicate undervaluation, and above 1 may suggest overvaluation.

A good P/E ratio depends on the market and industry: Below 20 is low (may indicate undervaluation), 20-25 is average (market-aligned), above 25 is high (may indicate overvaluation or high growth expectations).

Trailing P/E uses EPS from the past 12 months (historical data), while forward P/E uses estimated EPS for the next 12 months (projections). Trailing is more reliable but backward-looking; forward is forward-looking but speculative.

The P/E ratio is important because it helps investors assess stock valuation, compare companies within the same industry, gauge market expectations for earnings growth, and make informed buy/sell decisions.

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