What is the P/E Ratio?

The Price-to-Earnings (P/E) Ratio is a valuation metric that measures a company's current stock price relative to its earnings per share (EPS).
It indicates how much investors are willing to pay per ruppe/doller of earnings and is calculated as:

The formula for PE Ratio is:

\( \text{P/E Ratio} = \left( \frac{\text{Stock Price per Share}}{\text{Earnings Per Share (EPS)}} \right)\)

Where:

• Stock Price per Share: It indicates the stock price per share (e.g. ₹200, ₹500, ₹1000, etc).
• Earnings Per Share (EPS): it indicates the company’s EPS (e.g., ₹2.50).

Example of PE Ratio

Imagine you’re evaluating Company XYZ:

• Stock Price: ₹75.00 per share (found on a stock market app).
• EPS: ₹3.00 (from the company’s latest financial report).

Steps to calculate PE Ratio:

\( \text{P/E Ratio} = \left( \frac{\text{₹75.00}}{\text{₹3.00}} \right) = 25.00\)

Step-by-Step Guide to use PE Ratio Calculator

Enter the Stock Price: Input the current stock price per share (e.g., ₹50.00) in the "Price Per Share" field. You can find this on stock market apps or financial websites.

Add the Earnings Per Share (EPS): Type the company’s EPS (e.g., ₹2.50) in the "Earnings Per Share" field. EPS is often found in a company’s financial reports or on finance platforms.

Calculate PE Ratio: Press the "Calculate PE Ratio" button. You’ll instantly see the P/E ratio (e.g., 20.00), meaning investors pay ₹20 for every ₹1 of earnings.

Interpret Your Result

The “good” PE ratio (Price-to-Earnings ratio) depends on the context — industry, company growth, market conditions, etc. However, here are some general guidelines

🔹 General Benchmark

• PE between 15 and 25 is often considered healthy or average for established companies.

Low PE Ratio (<15)

• May indicate undervalued stock (potentially a good buy).
• ⚠️ Could also signal problems in the business (low growth, risks).

High PE Ratio (>25)

• Often suggests high growth expectations from investors.
• ⚠️ Stock might be overvalued or in a market bubble.

Why Use PE Ratio Calculator?

Our P/E Ratio Calculator is quick, free, and beginner-friendly, empowering you to make smarter investment decisions. Whether you’re new to stocks or a pro, it’s an essential tool for stock analysis. Try our P/E Ratio Calculator now and start evaluating stocks like a pro!

Thanks for using our P/E Ratio Calculator tool.Happy Investing 😊

​