P/E Ratio Calculator
Earnings yield is the number that compares to a bond.
Work out P/E Ratio. Earnings yield is the number that compares to a bond. Every rate is an input, not an assertion.
Price to earnings
20.00
5.00% earnings yield · Above the long-run average — the price assumes earnings growth
Earnings yield is the more useful of the two figures, because it puts a share on the same footing as a bond. A P/E of 20 is an earnings yield of 5%, which compares directly to a 5% gilt in a way that the number 20 does not. The long-run median market P/E is around 15, not 20, which is why 20 is described here as above average rather than average. Sector matters enormously too — a utility at 20 and a software company at 20 are telling you very different things. The PEG ratio divides P/E by growth, on the rough idea that a fairly-priced company trades at a multiple close to its growth rate. It is a heuristic rather than a valuation, and it breaks down completely for slow growers and for anything cyclical.
How the P/E Ratio Calculator works
Price to earnings, the earnings yield that is its reciprocal, and the PEG ratio. Earnings yield is the more useful figure, because it puts a share on the same footing as a bond.
Also known as: is this stock expensive · earnings yield from pe · peg ratio calculator · what is a normal pe ratio
Not financial advice. This calculator is for planning and illustration, not financial advice. Real products carry fees, taxes, and terms it does not model. Confirm figures with your lender or a qualified adviser before committing.
Frequently asked questions
What does a P/E ratio tell you?
How many years of current earnings the price represents. A P/E of 20 means paying 20 times what the company earns in a year, and it says nothing about whether that is reasonable without context.
What is the earnings yield?
The reciprocal of P/E, expressed as a percentage. A P/E of 20 is a 5% earnings yield, which compares directly to a 5% bond in a way the number 20 does not.
What is an average P/E?
The long-run median for the US market is around 15, though it has spent long periods well above and below. Sector matters enormously — a utility and a software company at the same multiple are telling you very different things.
What is the PEG ratio?
P/E divided by earnings growth rate, on the rough idea that a fairly-priced company trades near its growth rate. It is a heuristic rather than a valuation and breaks down for slow growers and anything cyclical.
Why can't I use P/E on a loss-making company?
Because dividing by negative earnings produces a negative number that means nothing. Loss-making companies are valued on revenue, on assets, or on a forecast of future earnings instead.
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