What is the P/E ratio formula?

P/E = market price per share ÷ earnings per share.

What is a good P/E ratio?

There is no single number. Compare with the company's history, its industry peers and the market average, and consider its growth.

What is the PEG ratio?

P/E divided by the expected annual EPS growth rate (in percent). It adjusts the P/E for growth.

What if EPS is negative?

The P/E is not meaningful. Analysts use other measures such as price-to-sales or EV/EBITDA instead.

P/E Ratio Formula and Calculator

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P/E Ratio Calculator

The price-to-earnings ratio divides a company’s share price by its earnings per share. It tells you how much investors are paying for each unit of annual profit, and it is the most quoted valuation multiple for stocks and indexes. A P/E of 20 means the market values the company at 20 years of current earnings.

Formula

P/E = Price per shareEarnings per share Earnings yield = EPSPrice PEG = P/Egrowth in %

Where

Price per share: current share price
EPS: earnings per share, usually the last 12 months (trailing) or next year (forward)
growth: expected annual EPS growth rate, used for the PEG ratio

Calculator

Share price

Earnings per share (EPS)

Expected EPS growth (optional, for PEG) (%)

Result and step-by-step solution

P/E ratio

20×

Investors pay 20.00 for each 1.00 of annual earnings.

Divide price by EPS
120.006.00 = 20
Earnings yield (inverse)
6.00120.00 = 5%
PEG ratio
2015 = 1.33

How to use the formula

Trailing P/E uses the last 12 months of reported EPS; forward P/E uses analysts’ forecast for the next year. The inverse, EPS ÷ price, is the earnings yield, which can be compared with bond yields. Because fast-growing companies justify higher multiples, the calculator also computes the PEG ratio, P/E divided by the expected EPS growth rate in percent; a PEG around 1 is often read as fair value for the growth on offer.

At a price of 120 and EPS of 6, the P/E is 20 and the earnings yield 5%; with 15% expected growth the PEG is 1.33. P/E is only meaningful when earnings are positive, and it should be compared with peers in the same industry. To compute EPS from the income statement, use the EPS formula; for asset-heavy companies, the price-to-book ratio is a useful complement.

Frequently asked questions

What is the P/E ratio formula?: P/E = market price per share ÷ earnings per share.
What is a good P/E ratio?: There is no single number. Compare with the company’s history, its industry peers and the market average, and consider its growth.
What is the PEG ratio?: P/E divided by the expected annual EPS growth rate (in percent). It adjusts the P/E for growth.
What if EPS is negative?: The P/E is not meaningful. Analysts use other measures such as price-to-sales or EV/EBITDA instead.

Last reviewed: September 26, 2026. Calculations run in your browser and were checked against numpy-financial, SciPy and published spreadsheet examples.