P/E Ratio Calculator
Evaluate stock valuation with our free P/E ratio calculator. Enter the stock price and earnings per share to calculate the P/E ratio, earnings yield, and PEG ratio. Get a basic valuation assessment compared to market averages.
The Price-to-Earnings (P/E) ratio is the most widely used stock valuation metric. It tells you how much investors are willing to pay per dollar of earnings. The formula is simply: P/E = Stock Price / Earnings Per Share. A P/E of 25 means investors pay $25 for every $1 of annual earnings. The S&P 500 has historically averaged a P/E of about 15-17, though in recent years it has trended higher at 20-25.
The earnings yield (1 / P/E, expressed as a percentage) provides the inverse perspective: how much earnings you get per dollar of stock price. An earnings yield of 5% means the company earns $0.05 per dollar of market value. This is useful for comparing stocks to bonds: if the 10-year Treasury yields 4%, a stock with a 3% earnings yield has a thin risk premium.
The PEG ratio (P/E divided by earnings growth rate) adjusts for growth. A PEG below 1.0 suggests the stock may be undervalued relative to its growth, while above 1.0 suggests it may be expensive. Peter Lynch popularized this metric, arguing that a fairly priced stock should have a P/E roughly equal to its growth rate. However, PEG has limitations for slow-growth or no-growth companies.