Price to Earnings Ratio Calculator

Back to calculators
United States dollar
United States dollar

What Is the Price to Earnings Ratio?

The price-to-earnings (P/E) ratio measures a company's share price relative to its earnings per share (EPS). Often called the price or earnings multiple, the P/E ratio helps assess the relative value of a company's stock. It's handy for comparing a company's valuation against its historical performance, against other firms within its industry, or the overall market.

Key Takeaways

  • The price-to-earnings (P/E) ratio is the proportion of a company's share price to its earnings per share.
  • A high P/E ratio could mean that a company's stock is overvalued or that investors expect high growth rates.
  • Companies with no earnings or are losing money don't have a P/E ratio because there's nothing to put in the denominator.
  • The two most used P/E ratios are forward and trailing P/E.
  • P/E ratios are most valuable when comparing similar companies in the same industry or for a single company over time.

Learn more at Investopedia