Price to Earnings Ratio Calculator (2024)

FAQs

What is a good PE ratio calculator? ›

As far as Nifty is concerned, it has traded in a PE range of 10 to 30 historically. Average PE of Nifty in the last 20 years was around 20.* So PEs below 20 may provide good investment opportunities; lower the PE below 20, more attractive the investment potential.

To calculate a company's (or index's) price-earnings ratio, divide its current stock price by its earnings per share. The quotient is the P/E ratio, which can be used to compare the expected values of various stocks over time.

In simple terms, a good P/E ratio is lower than the average P/E ratio, which is between 20–25. When looking at the P/E ratio alone, the lower it is, the better.

P/E Ratio is calculated by dividing the market price of a share by the earnings per share. For instance, the market price of a share of the Company ABC is Rs 90 and the earnings per share are Rs 9 . P/E = 90 / 9 = 10.

A P/E ratio of 200 is high. But it is basically saying that people expect the company to grow earnings to be 15 to 20 times as large as they are now (so the P/E ratio would be 10 to 15). If you don't think that the company has that kind of potential, don't invest.

In India, a good PE ratio between 20 to 25 is considered good, suggesting stock is fairly valued, balancing growth potential and investment risk. The Price-to-Earnings (P/E) Ratio is an important metric used by investors to determine the value of a stock in relation to its earnings.

The biggest limitation of the P/E ratio: It tells investors next to nothing about the company's EPS growth prospects. If the company is growing quickly, you will be comfortable buying it even it had a high P/E ratio, knowing that growth in EPS will bring the P/E back down to a lower level.

S&P 500 P/E Ratio is at a current level of 27.45, up from 24.79 last quarter and up from 23.46 one year ago. This is a change of 10.76% from last quarter and 17.03% from one year ago. The S&P 500 PE Ratio is the price to earnings ratio of the constituents of the S&P 500.

Price to earnings ratio, or P/E, is a way to value a company by comparing the price of a stock to its earnings. The P/E equals the price of a share of stock, divided by the company's earnings-per-share. It tells you how much you are paying for each dollar of earnings.

What is a good forward PE ratio? ›

What is a good forward PE ratio? An excellent forward PE ratio is between 10-25 for major stocks since stocks with a forward PE below 10 can often be a value trap.

Justified PE can be either leading/forward or trailing. It is the P/E derived from expected payout ratio, expected return and growth rate. o Leading= (1-b)/(r-g) o Trailing= (1-b) (1+g)/(r-g) It is different from real P/E which is just Price/Earnings.

The P/E ratio is one of many fundamental financial metrics for evaluating a company. It's calculated by dividing the current market price of a stock by its earnings per share.

To give you some sense of what the average for the market is, though, many value investors would refer to 20 to 25 as the average P/E ratio range.

Price to earnings calculator

A price-to-earnings (P/E) ratio is a financial metric used to evaluate the relative value of a company's stock. It is calculated by dividing the market price per share of a company's stock by its earnings per share (EPS).

A P/E ratio of 5 could be considered good or bad depending on the industry and the company's growth prospects. For example, the industry average P/E for oil and gas companies is 6.3. This means that if an E&P company is trading for below that, the company is currently priced cheaper than the industry average.

A P/E of 30 is high by historical stock market standards. This type of valuation is usually placed on only the fastest-growing companies by investors in the company's early stages of growth. Once a company becomes more mature, it will grow more slowly and the P/E tends to decline.

It also shows the amount that investors are comfortable paying for each dollar of sales per stock. While the ideal ratio depends on the company and industry, the P/S ratio is typically good when the value falls between one and two. A price-to-sales ratio with a value less than one is better.

Why is 17 used to calculate PE? The Price to Earnings ratio is to give you an idea of where a company is valued versus the rest of the market AND compared to other companies in the same sector. In general, the market is historically considered fairly valued when in the 15–17 range.