P/E Ratio Calculator
Category: Fundamental & Economic ToolsEvaluate stock valuations, compare companies across sectors, and determine if a stock is potentially overvalued or undervalued
Stock Information
Earnings Information
P/E Ratio Analysis Results
P/E Comparison by Sector
P/E to Growth Rate Analysis
Valuation Scenarios
Fair Value Analysis
Fair value estimate based on current EPS and market average P/E ratio.
Growth-Adjusted Value
Analysis based on P/E adjusted for earnings growth rate and risk-free rate.
Forward P/E Forecast
Future valuation based on projected earnings growth and current P/E ratio.
Valuation Insights
Current Valuation
With a P/E ratio of 26.09, this stock is trading above the sector average of 24.5. This suggests the stock may be slightly overvalued compared to sector peers.
Growth Perspective
The PEG ratio of 2.61 indicates the stock is trading at a premium relative to its growth rate. A PEG ratio above 1.0 generally suggests that earnings growth is not keeping pace with the valuation.
Earnings Yield Analysis
The current earnings yield of 3.83% is slightly above the risk-free rate of 3.5%. This indicates a minimal equity risk premium, which may not adequately compensate for the additional risk of equity investment.
Forward Outlook
Based on the projected earnings growth of 10%, the stock's forward P/E of 23.72 suggests moderate potential for price appreciation. Investors should monitor earnings results against these growth expectations.
Understanding P/E Ratio Analysis
The Price-to-Earnings (P/E) ratio is one of the most widely used valuation metrics in financial markets. It compares a company's share price to its earnings per share, indicating how much investors are willing to pay for each dollar of earnings.
Types of P/E Ratios
- Trailing P/E: Based on earnings from the past 12 months
- Forward P/E: Based on projected earnings for the next 12 months
- Normalized P/E: Adjusts for economic cycles by using average earnings over multiple years
- PEG Ratio: P/E ratio divided by earnings growth rate, providing context to the P/E
Interpreting P/E Values
- High P/E: May indicate overvaluation or expectations of strong future growth
- Low P/E: Could suggest undervaluation or concerns about future performance
- Negative P/E: Indicates the company is losing money (negative earnings)
- Industry Comparison: P/E should be compared with industry peers for context
- Historical Context: Compare current P/E to the company's historical average
P/E Ratio Formulas
Basic P/E Ratio
PEG Ratio
Earnings Yield
Justified P/E (Gordon Growth Model)
Limitations of P/E Analysis
- Accounting Differences: Variations in accounting practices can affect earnings figures
- Cyclical Businesses: P/E can be misleading for businesses with cyclical earnings
- Growth Not Considered: Basic P/E doesn't account for growth rates (PEG ratio addresses this)
- Negative Earnings: P/E cannot be calculated for companies with losses
- Interest Rate Environment: P/E ratios tend to be higher when interest rates are low
What this calculates
Price-to-earnings — what the market pays for each unit of profit.
- Formula
P/E = share price ÷ earnings per share- Worked example
- A 120 HKD share with EPS of 8 HKD trades on a P/E of 15.
- When to use it
- To compare a company against its own history or its sector.
- Common mistake
- P/E is meaningless without context. A low ratio often signals expected decline, not a bargain — and it breaks entirely when earnings are negative.