Try these example inputs in the P/E valuation calculator.
These figures match this guide's worked example. They are illustrative. They stay on this device and never appear in the URL.
Price-to-earnings, or P/E, asks a simple question: how many dollars does the market pay for one dollar of a company's earnings? You get it by dividing the share price by earnings per share (EPS). It is one of the most quoted valuation shortcuts, and it is easy to misuse.
Key takeaways
P/E = share price ÷ EPS
Implied share price = EPS × P/E multiple
The first number is what the market is paying. The second is what the stock would be worth if you chose a multiple. They are the same relationship, just solved for a different unknown.
So if a company earns $5 a share and trades at $100, its P/E is 20. Turn that around: $5 of EPS at a 20× multiple implies $100 a share. At 15× the implied price is $75; at 25× it is $125. If the stock actually trades at $90, those cases sit below, above, and further above the market price. Run the same numbers in the P/E valuation calculator.
The EPS in the denominator is a period you have to name:
| Label | What the earnings figure is |
|---|---|
| Trailing | The last reported twelve months, or the last reported fiscal year if that is all you have. |
| Fiscal year | The company's last completed fiscal year, even if a newer quarter exists. |
| Forward | An estimate for a future year. That is a forecast, not a reported fact. |
A $100 price over $5 of trailing EPS is a trailing 20×. The same price over $6 of expected next-year EPS is a forward 16.7×. Those are different questions. PEG only makes sense when the P/E period and the growth period match — trailing earnings with trailing growth, or forward with forward. Mixing them is a unit error, not a cheaper stock.
P/E compresses price and earnings into one multiple so you can compare companies. A 12× stock is cheaper on earnings than a 30× stock, all else equal. All else is rarely equal.
Earnings can be trailing (the last reported year) or forward (what analysts expect next year). A forward P/E looks lower if people expect growth. Neither figure is a quality score. Two companies can share a P/E and have nothing else in common — different debt, different cash, different durability. That is why enterprise value still matters: P/E looks at equity and earnings, not the whole capital structure.
A high multiple often means the market is paying up for growth. It can also mean earnings have collapsed while the price has not caught up. Read the ratio next to the business, not as a buy or sell signal.
You cannot divide by zero, so P/E is undefined when EPS is exactly zero. A loss-making company can produce a negative mathematical quotient, but that figure is not meaningful (N/M) for the usual P/E comparison. Taking the absolute value, or flipping the sign so a loss looks like a bargain multiple, is a trick — not a valuation. The calculators keep positive EPS only, and the live P/E on a company page stays blank for the same reason.
Until earnings turn positive, use another lens: sales, cash flow, a discounted cash flow if you have free cash flow, or enterprise value.
Earnings yield is P/E turned over: EPS ÷ price. At $5 of EPS and a $100 price, the yield is 5% and the P/E is 20.
PEG divides that P/E by an earnings growth rate in percent. A P/E of 20 and 10% growth is a PEG of 2. The growth rate is an assumption you type. The ratio does not say that growth will happen.
Both figures are in the P/E and PEG calculator. The valuation calculator still runs the relationship the other way: EPS times a multiple you choose.
On Apple the company page shows a live P/E (current price ÷ latest annual EPS) and a reported fiscal-year P/E. Those two can disagree. Use the dated figures on the page; do not plug in a number you remember from last quarter. The ranking snapshot does not invent EPS, and neither does the calculator — you type the earnings yourself.
For general education only. Nothing here is investment advice.
Formulas and worked examples are MarketCapLens's. See who checks the numbers.