How to Calculate P/E Ratio & Fair Value

What is P/E Ratio & Fair Value?

The P/E ratio compares stock price to earnings per share, showing how much investors pay per pound/dollar of profit. PEG adjusts for growth, making cross-stock comparisons more meaningful.

Formula

P/E Ratio = Stock Price / Earnings Per Share (EPS)

P: Stock price (Currency)
EPS: Earnings per share (Currency)

Step-by-Step Guide

1P/E = Stock Price / EPS
2PEG = P/E / Annual EPS Growth Rate
3Fair value = EPS x Sector average P/E

Worked Examples

Input

Stock $50, EPS $3, sector P/E 20, growth 10%

Result

P/E = 16.7x (below sector), fair value = $60, PEG = 1.67

Frequently Asked Questions

What is Price Earnings Calc?

The P/E ratio compares stock price to earnings per share, showing how much investors pay per pound/dollar of profit. PEG adjusts for growth, making cross-stock comparisons more meaningful

How accurate is the Price Earnings Calc calculator?

The calculator uses the standard published formula for price earnings calc. Results are accurate to the precision of the inputs you provide. For financial, medical, or legal decisions, always verify with a qualified professional.

What units does the Price Earnings Calc calculator use?

This calculator works with inches. You can enter values in the units shown — the calculator handles all conversions internally.

What formula does the Price Earnings Calc calculator use?

The core formula is: P/E = Stock Price / EPS. Each step in the calculation is shown so you can verify the result manually.

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