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P/E Ratio Calculator

Compute a stock's price-to-earnings ratio, earnings yield, and PEG ratio, and compare it against an industry average P/E.

P/E ratio 25.00
Earnings yield 4.00%
PEG ratio 1.67
Vs. industry average +25.00%
Valuation Trades at a premium to industry average

How the P/E ratio calculator works

The price-to-earnings (P/E) ratio is Stock Price / Earnings Per Share (EPS) — it tells you how much investors are paying for each dollar of a company's current earnings. For a deeper look at what makes a P/E ratio "good" or "bad" in context, see our guide: How to Read a P/E Ratio. This calculator focuses on computing the numbers themselves, plus a few ways to put a single P/E figure in context.

Earnings yield is simply the P/E ratio flipped over: Earnings Yield = (EPS / Stock Price) × 100. It expresses the same relationship as a percentage, which some investors find more directly comparable to bond yields or other percentage-based return measures.

The PEG ratio divides the P/E ratio by the expected annual earnings growth rate: PEG = P/E / Growth Rate. It's a way of asking "is this P/E justified by how fast earnings are growing?" — a higher P/E can still result in a low (attractive) PEG if growth is fast enough, and a low P/E can result in a high (unattractive) PEG if growth is slow or negative.

Finally, the calculator compares your P/E to an industry average you provide: % Difference = (P/E − Industry Average P/E) / Industry Average P/E × 100. A difference beyond ±10% is labeled a premium or discount to the industry average; anything closer is labeled "in line."

Worked example

Suppose a stock trades at $150 per share, with $6 in earnings per share, in an industry that averages a 20 P/E, and analysts expect 15% annual earnings growth.

P/E ratio = 150 / 6 = 25.00. Earnings yield = (6 / 150) × 100 = 4.00%. PEG ratio = 25 / 15 ≈ 1.67.

Compared to the industry average of 20, this stock's P/E is +25.00% higher — beyond the ±10% band, so the calculator labels it as "Trades at a premium to industry average." Whether that premium is justified depends on factors this simple comparison doesn't capture, like superior growth, margins, or competitive position — the PEG ratio of 1.67 is one data point toward answering that, not a final verdict.

Common mistakes to avoid

1. Comparing P/E ratios across different industries

A software company and a utility company can have very different "normal" P/E ratios for structural reasons — growth rates, capital intensity, and risk all differ by industry. Always compare a stock's P/E to its own industry average, not to the broad market or an unrelated sector.

2. Treating PEG below 1.0 as automatically "cheap"

PEG near or below 1.0 is a popular rule of thumb, but it relies entirely on the growth rate you enter being accurate — an overly optimistic growth estimate will make almost any stock's PEG look attractive. Stress-test your growth assumption before trusting the PEG figure too much.

3. Not checking whether EPS is trailing or forward-looking

A P/E calculated from trailing (already-reported) earnings can look very different from one using forward (estimated) earnings, especially for a company whose earnings are expected to change quickly. Know which EPS figure you're entering before comparing your result to a P/E you saw quoted elsewhere.

Frequently asked questions

What is a good P/E ratio?

There's no single "good" P/E ratio — it depends heavily on the industry, growth expectations, and interest rate environment. A P/E that looks expensive in a slow-growing, mature industry can look cheap for a fast-growing sector, which is why comparing against an industry average (and the PEG ratio) matters more than judging a P/E in isolation. See our full guide for more.

What does the PEG ratio add that P/E alone doesn't?

PEG divides the P/E ratio by the expected earnings growth rate, so it accounts for growth directly. A stock with a high P/E but very fast growth can have a lower (more attractive) PEG than a stock with a lower P/E but slow or no growth. A PEG near 1.0 is a commonly cited (though rough) rule-of-thumb for "fairly valued relative to growth."

What is earnings yield used for?

Earnings yield (EPS divided by price) is the inverse of the P/E ratio, expressed as a percentage. It's sometimes compared directly to bond yields as a rough gauge of relative value between stocks and fixed income — a stock with a high earnings yield relative to bond yields is sometimes considered attractively priced on that basis alone.

Why compare a stock's P/E to an industry average instead of the whole market?

Different industries structurally trade at different average P/E ratios — fast-growing technology companies often trade at higher multiples than utilities or banks, for reasons unrelated to whether either is "overvalued." Comparing within the same industry controls for that, giving a more apples-to-apples read than comparing to a broad market average.

Does this calculator use trailing or forward earnings?

Neither specifically — it computes P/E from whatever EPS figure you enter. Trailing P/E uses the last twelve months of actual earnings, while forward P/E uses analysts' estimated future earnings; the two can differ meaningfully, so it's worth knowing which one you're entering.