PE Ratio Calculator

Formula

To calculate the PE Ratio:

\[ PE = \frac{SP}{EPS} \]

Where:

$PE$ is the Price-to-Earnings Ratio
$SP$ is the Average Share Price in $
$EPS$ is the Earnings Per Share in $

What is the PE Ratio?

The PE Ratio (Price-to-Earnings Ratio) is a financial metric used to evaluate the valuation of a company's stock. It is calculated by dividing the average share price by the earnings per share. A higher PE ratio indicates that investors are willing to pay more for each dollar of earnings, which can be interpreted as a sign of growth expectations or overvaluation.

Example Calculation 1

Let's assume the following values:

Average Share Price ($SP$) = $50
Earnings Per Share ($EPS$) = $5

Using the formula:

\[ PE = \frac{50}{5} = 10 \]

The PE Ratio is 10.

Example Calculation 2

Let's assume the following values:

Average Share Price ($SP$) = $100
Earnings Per Share ($EPS$) = $8

Using the formula:

\[ PE = \frac{100}{8} = 12.5 \]

The PE Ratio is 12.5.