P/E Ratio Calculator
Calculate the price-to-earnings ratio from per-share data or company totals. Add a target P/E to estimate an implied share price or market capitalization.
Results
P/E ratio formulas
P/E ratio = share price ÷ earnings per share (EPS). The equivalent company-total formula is P/E ratio = market capitalization ÷ net income attributable to common shareholders. Both sides must use the same earnings basis and date.
Earnings yield = EPS ÷ share price × 100%, or net income ÷ market capitalization × 100%. With positive earnings, implied value at a target P/E equals earnings × target P/E.
Verified examples
| Inputs | P/E and yield | Target scenario |
|---|---|---|
| $125 share price; $5 EPS | 25.0000× P/E; 4.00% earnings yield | At 20.00×, implied price is $100: $25 or 20.00% below current price |
| $5.0 billion market cap; $250 million net income | 20.0000× P/E; 5.00% earnings yield | At 25.00×, implied market cap is $6.25 billion: $1.25 billion or 25.00% above current |
| $40 share price; −$2 EPS | P/E is not meaningful; −5.00% earnings yield | Target P/E analysis is unavailable with negative earnings |
| $30 share price; $0 EPS | P/E is undefined; 0.00% earnings yield | Target P/E analysis is unavailable with zero earnings |
How to use and interpret the result
Choose the per-share method when price and EPS use the same share class. Choose company totals when market capitalization and income attributable to common shareholders cover the same company and reporting basis. A higher P/E means investors pay more for each unit of current earnings, but it does not by itself show that a stock is expensive or attractive.
Trailing P/E normally uses recent reported earnings; forward P/E uses forecast earnings. Do not mix a current share price with EPS from a different share class, an incompatible period or total company income that includes amounts unavailable to common shareholders.
Input limits and assumptions
- Monetary inputs allow up to two decimal places and magnitude no greater than 1,000,000,000,000,000.
- Price and market capitalization cannot be negative. EPS and net income may be negative.
- Zero earnings make P/E undefined. Negative earnings make P/E not meaningful for conventional valuation, although the earnings yield can still be negative.
- The optional target P/E ranges from 0.01× to 10,000× and is applied only to positive earnings.
- Currency selection changes formatting only. It does not convert currencies, retrieve a live share price, adjust splits or update earnings.
- Results do not account for growth, debt, cash, dilution, cyclicality, accounting quality or industry differences.
P/E is one valuation measure, not an investment decision. Reconcile the price, share count and earnings definition, and compare like-for-like companies and periods.
Frequently asked questions
What does a negative P/E mean?
It indicates negative earnings. Market convention usually treats P/E as not meaningful rather than comparing the negative multiple with profitable companies.
Is a low P/E always better?
No. A low multiple can reflect slower expected growth, higher risk, cyclical peak earnings or business problems. A high multiple can reflect growth expectations that may or may not occur.
Should I use trailing or forward EPS?
Use one definition consistently. Trailing EPS is based on reported results; forward EPS depends on estimates and carries forecast risk. Label the basis when comparing companies.
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