PE Ratio Calculator
Calculate a stock's price-to-earnings ratio and compare it against sector averages. Enter the current stock price and earnings per share to see if a stock is cheap or expensive relative to its peers.
Enter Stock Data
Enter the current stock price and earnings per share to calculate the P/E ratio.
P/E Ratio
Fair Value23.1x
vs. sector average of 22x(+4.9%)
Analysis
Your P/E Ratio
23.1x
Price ÷ EPS
Earnings Yield
4.33%
EPS ÷ Price (inverse P/E)
Fair Value (at sector avg PE)
$143.00
EPS × 22x
Upside / Downside
-4.7%
vs. sector-implied fair value
View average P/E ratios by sector
| Sector | Avg P/E | Earnings Yield |
|---|---|---|
| Technology | 30x | 3.33% |
| Healthcare | 22x | 4.55% |
| Finance | 13x | 7.69% |
| Consumer Discretionary | 25x | 4.00% |
| Consumer Staples | 20x | 5.00% |
| Industrials | 20x | 5.00% |
| Energy | 12x | 8.33% |
| Materials | 15x | 6.67% |
| Utilities | 18x | 5.56% |
| Real Estate | 35x | 2.86% |
| Communication Services | 20x | 5.00% |
| S&P 500 Average | 22x | 4.55% |
How the P/E Ratio Works
The price-to-earnings ratio is the most widely used valuation metric on Wall Street. It tells you how much investors are willing to pay for each dollar of a company's earnings, making it a quick way to compare stocks within the same industry.
The formula is simple: P/E = Stock Price ÷ Earnings Per Share. But interpreting it requires context. A P/E of 30 is expensive for a utility company but might be cheap for a high-growth tech company doubling its earnings every year.
When P/E Works Best
- Comparing within the same sector: A bank with a P/E of 10 vs. another at 15 tells you something. Comparing a bank at 10 to a tech company at 35 is less meaningful.
- Stable, profitable companies: P/E works best for companies with consistent positive earnings. For unprofitable or cyclical companies, other metrics may be better.
- As a starting point: P/E is a screening tool, not a valuation tool. Pair it with our DCF calculator or PEG calculator for a deeper analysis.
Want to see P/E ratios for real stocks? Browse our stock fair value estimates for 510+ US stocks with daily-updated financials.
PE Ratio Calculator FAQ
What is the P/E ratio?
The price-to-earnings (P/E) ratio measures how much investors are paying for each dollar of a company's earnings. It's calculated by dividing the stock price by earnings per share (EPS). A P/E of 20 means investors are paying $20 for every $1 of annual earnings.
What is a good P/E ratio?
There's no universal 'good' P/E ratio because it depends on the industry, growth rate, and market conditions. Generally, a P/E below the sector average may indicate undervaluation, while a P/E above it may signal overvaluation or high growth expectations. The S&P 500 historical average P/E is around 20-22x.
What's the difference between trailing P/E and forward P/E?
Trailing P/E uses the last 12 months of actual earnings (historical). Forward P/E uses analyst estimates of next year's earnings (projected). Forward P/E is lower when earnings are expected to grow, and higher when earnings are expected to decline. This calculator uses trailing P/E for consistency.
Why do tech stocks have higher P/E ratios?
Technology companies typically have higher P/E ratios because investors expect faster earnings growth. A company growing earnings at 25% per year can justify a higher multiple than one growing at 5%. The PEG ratio adjusts for this by dividing P/E by the growth rate. Try our PEG ratio calculator for a growth-adjusted view.
Can the P/E ratio be negative?
Yes, if a company has negative earnings (a net loss), the P/E ratio is technically negative or 'N/A'. A negative P/E is not meaningful for valuation because it implies investors are paying for losses. In these cases, other metrics like price-to-sales (P/S) or price-to-book (P/B) are more useful.
What is earnings yield?
Earnings yield is the inverse of the P/E ratio: EPS divided by price, expressed as a percentage. A stock with a P/E of 20 has an earnings yield of 5%. Earnings yield is useful for comparing stocks to bond yields: if a stock's earnings yield is higher than the 10-year Treasury yield, equities may be relatively attractive.