📊 P/E Ratio Calculator
Calculate Price-to-Earnings ratio from stock price and earnings per share.
How to Interpret the P/E Ratio
P/E = Stock Price ÷ Earnings per Share. It tells you how many dollars investors pay for each dollar of earnings. A P/E of 20 means investors pay $20 for every $1 of annual earnings. The S&P 500 historical average P/E is ~16–18x. Growth stocks command higher P/E ratios; value stocks trade at lower multiples. Always compare P/E to the company's own history and industry peers.
PEG Ratio — A Better Valuation Metric
PEG = P/E ÷ Expected EPS Growth Rate. A PEG under 1.0 suggests the stock may be undervalued relative to its growth. PEG of 1.0 is often considered "fairly valued." Above 2.0 may indicate overvaluation. Peter Lynch popularized PEG as a quick way to account for growth when evaluating P/E ratios.
People Also Ask
It depends on the sector and market environment. Historically: S&P 500 average 16–18x, growth tech 30–50x, utilities 15–20x, financials 10–15x. During low interest rate periods, P/E ratios expand; during high rate periods, they contract. Compare to the company's own 5-year average P/E and to direct competitors.
Trailing P/E uses actual earnings from the past 12 months. Forward P/E uses analysts' projected earnings for the next 12 months. Forward P/E is typically lower because earnings are expected to grow. If a company's forward P/E is much lower than trailing, analysts expect strong earnings growth.