Work out price to earnings ratio instantly with clear inputs, formula shown and shareable results.
The price-earnings ratio is how many years of current earnings the market is paying for. Its reciprocal, the earnings yield, is directly comparable with bond yields and is often the more useful way to look at the same number.
P/E and earnings yield
P/E = price / EPS; earnings yield = EPS / price
Figures are estimates for planning only. Market returns are not guaranteed, and rates, limits and tax rules change. This is not financial or tax advice — speak to a qualified adviser before acting.
No. It can signal falling earnings or high risk. Compare within an industry and check the quality and durability of earnings.
It puts equities on the same footing as bonds, which is how many allocators judge relative value.