Pe Ratio Calculator

How to Use the Price-to-Earnings (P/E) Ratio Calculator

This guide will walk you through the steps to effectively use the P/E Ratio Calculator. This tool helps investors evaluate a company’s current stock price relative to its per-share earnings, providing insight into the valuation of a stock. Let’s begin!

Step 1: Enter the Current Stock Price

Begin by locating the Current Stock Price ($) input field. This field requires you to enter the stock’s current market price. Ensure that the value entered is at least $0.01, as values lower than this are not valid. Use increments of $0.01 for precision.

Step 2: Input Earnings Per Share (EPS)

In the next field, Earnings Per Share (EPS) ($), input the EPS value for the stock you are analyzing. EPS is a crucial component in determining the P/E ratio, and like the stock price, it must be at least $0.01 with incremental steps of $0.01.

Step 3: Select the Earnings Type

Navigate to the Earnings Type dropdown. Here, you will choose between Trailing Twelve Months (TTM) or Forward (Projected) earnings. Selecting the appropriate earnings type aligns the calculation with the intended analysis period. Ensure this field is filled, as it is required for the calculator to function.

Step 4: Review the Calculation Results

• P/E Ratio: This result is obtained by dividing the stock price by the EPS. It is formatted to two decimal places and is expressed with a suffix “x” to denote times. This ratio helps determine whether a stock is over or under-valued based on its earnings.
• Earnings Yield: Calculated as (EPS / stock price) * 100, this value shows the percentage return on investment if earnings remain consistent. It’s also presented with two decimal places for accuracy.
• Price per $1 of Earnings: This result, similar to the P/E ratio, is presented in currency format ($USD) and illustrates how much an investor is paying for one dollar of earnings. The value is displayed to two decimal places.

By following these steps, users can effectively utilize the P/E Ratio Calculator to gain valuable insights into the financial valuation of a company. This analysis is an integral part of investment decision-making and helps in comprehending the market’s valuation of a company’s earnings potential.