Price-to-Earnings Ratio (P/E) Calculator

Valuation
Updated Oct 2026 • Has calculator

Measures how much investors pay per dollar of earnings.

Calculate P/E Ratio

P/E Ratio Formula

P/E = Stock Price ÷ Earnings Per Share (EPS)

Trailing 12-month diluted EPS

P/E Ratio

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Not investment advice.

What is P/E Ratio?

The price-to-earnings ratio (P/E ratio) compares a company's current stock price to its earnings per share (EPS), showing how much investors are willing to pay for each dollar of earnings. A higher P/E suggests investors expect strong future growth, while a lower P/E may indicate the stock is undervalued or that the company faces near-term headwinds. The P/E ratio is one of the most widely used valuation metrics in equity analysis, allowing investors to compare companies within the same industry and assess whether a stock trades at a premium or discount to its historical average.

Worked Example

Worked example — Apple Inc. (AAPL)

FY2024

Step 1  Stock price: $185.00
Step 2  EPS (FY2024 diluted): $6.08
Step 3  P/E = $185.00 ÷ $6.08 = 30.43x
Step 4  → Investors pay $30.43 for every $1 of Apple’s earnings

Source: Apple Inc. — Form 10-K filings (SEC EDGAR) (2024-11-01)

How to Interpret P/E Ratio

< 10
Deep Value — possibly undervalued
10 – 17
Fair Value — near historical average
17 – 30
Growth Premium — above-average growth
> 30
High Expectations — priced for growth

📚 Valuation Basics — Complete the path

  1. Market Cap
  2. P/E Ratio
  3. EPS
  4. PEG Ratio
  5. EV/EBITDA
Sources
  1. Apple Inc. — Form 10-K filings (SEC EDGAR)
  2. CFA Institute — Market-Based Valuation: Price and Enterprise Value Multiples
  3. Investopedia — Price-to-Earnings Ratio