P/E Ratio Calculator
Work out a share's P/E ratio, forward P/E, PEG ratio, earnings yield and dividend yield from its price and earnings, and see the price a target P/E would imply. Runs in your browser; nothing is uploaded.
A worked example
Say a share trades at ₹500 and earned ₹25 per share over the last 12 months. Its P/E is 500 ÷ 25 = 20, and its earnings yield is 25 ÷ 500 = 5%. If earnings are expected to grow 15%, next year's EPS is 25 × 1.15 = ₹28.75, so the forward P/E is 500 ÷ 28.75 = 17.39 and the PEG ratio is 20 ÷ 15 = 1.33. A ₹5 dividend is a 1% yield (5 ÷ 500) and 20% of earnings (5 ÷ 25). If you think the share deserves a P/E of 25, the price that implies is 25 × 25 = ₹625, which is 25% above today's price.
Understanding the ratios
- P/E ratio
- Share price divided by earnings per share. It is how many rupees you pay for each rupee of last year's profit. It is only meaningful when EPS is positive.
- Forward P/E
- Price divided by next year's expected EPS, which here is EPS times (1 + growth). It is lower than the P/E whenever earnings are expected to grow.
- PEG ratio
- The P/E divided by the growth rate as a whole number, so 20 ÷ 15 for a P/E of 20 and 15% growth. It needs positive growth, and it is only as reliable as the growth estimate you give it.
- Earnings yield
- EPS divided by price, the P/E turned upside down. It lets you compare a share's earnings with the yield on a bond or deposit.
- Dividend yield and payout
- Dividend yield is the dividend per share divided by the price. The payout ratio is the dividend divided by EPS, the share of profit paid out.
Common questions
What is a good P/E ratio?
There is no single good number. A fair P/E depends on how fast the company is growing, how risky and cyclical its profits are, its sector and the level of interest rates. It is more useful to compare a share's P/E with its own history and with similar companies than with a fixed figure.
What is the difference between trailing and forward P/E?
Trailing P/E uses the last 12 months of actual earnings. Forward P/E uses a forecast of next year's earnings, which here is the last 12 months' EPS grown by the rate you enter. The forward figure is only as reliable as that forecast.
How is the PEG ratio calculated?
It is the P/E divided by the expected yearly earnings growth rate, entered as a whole number. A P/E of 20 with growth of 15% gives a PEG of 1.33. A lower PEG means you pay less for each point of growth, but it is only a rough comparison and depends entirely on the growth estimate.
What if EPS is negative?
A P/E ratio is not meaningful when earnings per share are zero or negative, so the calculator shows n/a. The earnings yield is still shown, and it will be negative.
What is earnings yield used for?
It is EPS divided by price, so a P/E of 20 is an earnings yield of 5%. It lets you compare what a share earns for each rupee invested with what a bond or fixed deposit pays, although the earnings are not paid out to you.
What does the dividend payout ratio tell me?
It shows how much of each year's profit is paid out as dividends. A low payout leaves more profit in the business, and a payout above 100% means the dividend is larger than the earnings.
Where do I find EPS?
In the company's quarterly or annual results, or on a stock data page. Use the figure for the last 12 months so that it matches the current price you are comparing it with.