P/E Ratio Calculator

The P/E ratio tells you how much investors are willing to pay for each dollar of earnings. A P/E of 25 means investors pay $25 for every $1 of annual earnings. Higher P/E ratios generally indicate that investors expect higher future growth, while lower P/E ratios may suggest the stock is undervalued or that the company faces challenges.

The earnings yield (the inverse of P/E) lets you compare stock returns to bond yields directly. A stock with a P/E of 20 has a 5% earnings yield, making it easy to weigh against a Treasury bond paying 4%.

There is no single "good" P/E ratio. It depends on the industry, growth rate, and market conditions. The S&P 500 historically averages a P/E of 15–20, though it often trades higher. Tech companies routinely have P/E ratios above 30 because of their growth potential, while utilities and banks often trade below 15.

The PEG ratio (P/E divided by growth rate) adjusts for growth. A PEG below 1.0 suggests the stock may be undervalued relative to its growth, while a PEG above 1.0 suggests a premium. Always compare within the same sector for the most meaningful analysis.