# P/E Ratio Calculator

Calculate the Price-to-Earnings ratio, earnings yield, and PEG ratio for any stock. Assess whether a stock is overvalued or undervalued. Free calculator.

## What this calculates

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.

## Inputs

- **Stock Price** ($) — min 0.01 — The current market price per share.
- **Earnings Per Share (EPS)** ($) — The company's earnings per share (trailing 12 months).
- **Earnings Growth Rate (optional)** (%) — min -100, max 200 — Expected annual earnings growth rate for PEG ratio calculation.

## Outputs

- **P/E Ratio** — Price divided by Earnings Per Share.
- **Earnings Yield** — formatted as percentage — The inverse of P/E (EPS / Price). Higher is better value.
- **PEG Ratio** — P/E divided by growth rate. Below 1.0 may indicate undervaluation.
- **Valuation Assessment** — formatted as text — A basic assessment compared to the S&P 500 average P/E.

## Details

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.

## Frequently Asked Questions

**Q: What is a good P/E ratio?**

A: There is no universal 'good' P/E. It depends on the industry, growth rate, and market conditions. Value stocks typically have P/E ratios of 10-15, while growth stocks can have P/E ratios of 30-60+. Compare a company's P/E to its industry peers and its own historical range. A 'good' P/E is one that is reasonable given the company's growth prospects.

**Q: What does a high P/E ratio mean?**

A: A high P/E ratio means investors are paying a premium for each dollar of earnings, which usually indicates they expect strong future growth. High-growth technology companies often have P/E ratios of 40-100+. However, a very high P/E can also indicate overvaluation or speculative pricing. Always consider the growth rate (PEG ratio) alongside P/E.

**Q: What is the difference between trailing and forward P/E?**

A: Trailing P/E uses actual earnings from the past 12 months, while forward P/E uses estimated earnings for the next 12 months. Trailing P/E is based on real data but looks backward. Forward P/E is forward-looking but relies on analyst estimates that may be wrong. Most investors look at both, with forward P/E being more relevant for fast-changing companies.

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Source: https://vastcalc.com/calculators/finance/pe-ratio
Category: Finance
Last updated: 2026-04-21