Calculate the P/E ratio, earnings yield and PEG of a stock.
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How is the P/E ratio of a stock calculated?
P/E ratio = share price ÷ earnings per share. Earnings yield = EPS ÷ price, and PEG ratio = P/E ÷ annual growth rate (%). The P/E shows how much investors pay per dollar of earnings and is best compared within an industry. For example, a $150 stock with $5 EPS has a P/E of 30 and a 3.33% earnings yield; at 15% growth the PEG is 2.0.
Understanding your result
The P/E ratio shows how much investors pay for each dollar of earnings. It is most useful compared within an industry. The PEG ratio adjusts P/E for growth — around 1 is often seen as fair value.
Formula and method
P/E ratio = share price ÷ earnings per share. Earnings yield = EPS ÷ price. PEG ratio = P/E ÷ annual growth rate (%).
Worked example
A $150 stock with $5 EPS has a P/E of 30 and an earnings yield of 3.33%; at 15% growth the PEG is 2.0.
How to use this tool
- Enter the share price.
- Enter the earnings per share.
- Optionally add a growth rate for PEG.
Common mistakes to avoid
- Comparing P/E ratios across very different industries.
- Using a P/E for a company with negative earnings.
About the P/E Ratio Calculator
The P/E Ratio Calculator works out a stock’s price-to-earnings ratio, its earnings yield, and the growth-adjusted PEG ratio, from the share price, earnings per share and expected growth.
Who should use this tool
Investors and students comparing stock valuations.
Benefits
- P/E ratio and earnings yield.
- PEG ratio when you add a growth rate.
- A plain-language read on the valuation.
- Instant and private.
Practical use cases
- Comparing two stocks’ valuations.
- Checking if a P/E is high for the growth.
- Converting P/E into an earnings yield.
Frequently asked questions
What is a good P/E ratio?
There is no single number — it depends on the industry and growth. Compare a stock’s P/E with its peers and its own history.
What does the PEG ratio add?
It divides P/E by the growth rate, so a high P/E can still be reasonable if earnings are growing quickly. A PEG near 1 is often considered fair.