Price-to-Earnings (P/E) Calculator

About this calculator

The price-to-earnings ratio (P/E) divides a company's share price by its earnings per share, showing how many years of current earnings it would take to pay back the purchase price — or, viewed differently, how much investors are willing to pay today for each unit of the company's profit. A high P/E generally signals that the market expects strong future growth, while a low P/E can indicate either an undervalued stock or genuine concerns about the company's prospects.

Analysts distinguish between trailing P/E, based on the last twelve months of actual reported earnings, and forward P/E, based on analysts' earnings estimates for the coming year — the two can diverge significantly for companies expected to grow or shrink quickly. P/E is most useful when comparing companies within the same industry, since typical multiples vary widely between sectors like utilities and high-growth technology. This calculator takes the share price and earnings per share to compute the P/E ratio and its inverse, the earnings yield.