P/E Ratio Calculator
Stock P/E from share price and earnings per share, with yield.
What it does
The P/E ratio prices each dollar of earnings: $100 a share on $5 of earnings costs $20 per $1 earned. High readings charge more for growth hopes while low readings charge less, often beside higher risk or slower growth.
The tool above takes share price with earnings per share. It returns the ratio, the earnings yield, and the per-dollar price. The default $100 at $5 EPS gives 20 with a 5.00% yield at $20.00 per $1 earned.
Definitions match SEC and FINRA investor education: price over current EPS, where EPS is past 12 month earnings over common shares outstanding. Worked checks agree, including the SEC $20 on $2 case at 10 and the FINRA 25 versus 20 comparison.
Trailing uses history while forward uses estimates, and losses break the gauge entirely. A negative EPS prints no ratio here; price to sales or book value carries those comparisons instead.
How to use
- Type the current share price.
- Type EPS: past 12 months for trailing, estimate for forward.
- Read P/E first, yield beside it.
- Note which EPS vintage you used before comparing.
- Compare inside sectors, not across them.
- Treat negative EPS as no ratio, not zero.
Formula
- price
- Current market price per share.
- EPS
- Earnings per share, trailing or forward, labeled.
- yield
- Earnings per $100 of price, the inverse view.
Forward P/E swaps estimates into EPS; keep trailing and forward readings apart. Stock splits restate both price and EPS, leaving the ratio intact.
Worked example
Example: $100 at $5 EPS
Defaults: price $100, EPS $5.
- Divide: 100 / 5 = 20.
- Yield: 100 / 20 = 5.00%.
- Per dollar: $20.00 buys $1 of earnings.
- SEC check: $20 on $2 is 10.
- Tool shows 20, 5.00%, $20.00 per $1 of earnings.
Reference table
| Price and EPS | P/E | Yield |
|---|---|---|
| $20 on $2 | 10 | 10.00% |
| $100 on $5 | 20 | 5.00% |
| Company A at 25 | 25 | 4.00% |
| Company B at 20 | 20 | 5.00% |
Limits
- One multiple; debt, cash, and growth ignored.
- Trailing looks back; forward guesses ahead.
- Losses give no ratio.
- Sector norms differ widely.
Common mistakes
- Mixing trailing and forward EPS in one screen.
- Reading 10 as cheap without checking why.
- Dividing by zero or negative EPS.
- Comparing banks with tech multiples.
- Ignoring dilution in share counts.
Try it yourself
Quick checks. Answers sit tucked under each question.
$20 price, $2 EPS?
P/E 10 with 10.00% yield.
Loss of $1 on $20 price?
Rejected: negative earnings give no meaningful P/E.
Zero EPS?
Rejected: enter earnings other than 0.
Questions
What is the default P/E?
20 on $100 at $5 EPS, with 5.00% yield.
Trailing or forward?
Trailing uses past 12 months; forward uses estimates. Label yours.
High or low better?
Neither alone: high charges growth hopes, low often charges risk.
Negative EPS?
No meaningful ratio; use sales or book multiples.
What is earnings yield?
100 over P/E: the earnings version of an interest rate.
A at 25 versus B at 20?
Buyers pay more per $1 of A earnings than B.