# What is the P/E ratio?

Computes the price-to-earnings (P/E) ratio, share price ÷ earnings per share, and the earnings yield.

- Page: https://www.acalculator.org/finance/pe-ratio-calculator
- JSON spec: https://www.acalculator.org/finance/pe-ratio-calculator.json
- Version: 98f71f9bfebd

## Default answer

Example with the default inputs (Share price $69.41, Earnings per share (EPS) $3.75): At $69.41 a share and EPS of $3.75, the P/E ratio is 18.51 and the earnings yield 5.4%.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| price | Share price | The market price of one share. Type the price you see; the page fetches no quotes. |
| eps | Earnings per share (EPS) | Earnings per share for the last 12 months (trailing) or the next 12 months (forward). |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| pe | P/E ratio | Share price ÷ earnings per share. |
| yield | Earnings yield | Earnings per share ÷ share price × 100, the P/E ratio turned upside down. |

## Method

P/E ratio = share price ÷ earnings per share. Earnings yield = earnings per share ÷ share price × 100.

## Assumptions

- You type the share price and EPS; nothing is fetched.
- EPS must be more than $0; a loss gives no P/E.
- Arithmetic is exact on the typed decimals; both results show to 2 decimals, halves up.

## Worked examples

1. price = $69.41, eps = $3.75 gives pe = 18.509333, yield = 5.40268%. Source: OpenStax, Principles of Finance, 6.5 Market Value Ratios (P/E ratio = market value per share ÷ earnings per share; $69.41 ÷ $3.75 = 18.51). https://openstax.org/books/principles-finance/pages/6-5-market-value-ratios.
2. price = $20.00, eps = $2.00 gives pe = 10, yield = 10%. Source: U.S. Securities and Exchange Commission, Beginners' Guide to Financial Statements (P/E ratio = price per share ÷ earnings per share; a $20 stock earning $2 a share has a P/E of 10). https://www.sec.gov/about/reports-publications/beginners-guide-financial-statements.
3. price = $150.25, eps = $6.01 gives pe = 25, yield = 4%.

## FAQ

### What is the P/E ratio?

The price-to-earnings (P/E) ratio compares a stock's price with the company's earnings per share. A P/E of 10 means buyers pay $10 for each $1 of yearly earnings.

### How do I calculate the P/E ratio?

Divide the share price by the earnings per share. A stock at $20 with EPS of $2 has a P/E of 20 ÷ 2 = 10. Clear Lake Sporting Goods at $69.41 with EPS of $3.75 has a P/E of 18.51.

### What is the earnings yield?

The earnings yield is EPS divided by the share price, as a percent. It is the P/E ratio turned upside down: a P/E of 10 is an earnings yield of 10%, and a P/E of 25 is 4%. It is easy to compare with bond yields.

### Should I use trailing or forward EPS?

Trailing EPS uses the last 12 months of reported earnings. Forward EPS uses analysts' estimates for the next 12 months. Either works here; say which one you used when you compare stocks.

### What is a good P/E ratio?

There is no single good number. A high P/E can mean buyers expect fast growth, or that the stock is expensive. Compare a company with others in the same industry and with its own past P/E.

### Why is there no P/E for a loss?

When EPS is $0 or negative, price ÷ EPS has no useful meaning, so the calculator gives no answer. Analysts usually write such a P/E as "not meaningful".

## Sources

- U.S. Securities and Exchange Commission, Beginners' Guide to Financial Statements: P/E ratio = price per share ÷ earnings per share; a stock at $20 earning $2 a share has a P/E of 10. https://www.sec.gov/about/reports-publications/beginners-guide-financial-statements (retrieved 2026-10-18)
- OpenStax, Principles of Finance, 6.5 Market Value Ratios: P/E ratio = market value per share ÷ earnings per share, trailing or forward; Clear Lake Sporting Goods at $69.41 with EPS of $3.75 has a P/E of 18.51. https://openstax.org/books/principles-finance/pages/6-5-market-value-ratios (retrieved 2026-10-18)