P/E Ratio (Price/Earnings)
Calculate a stock's P/E ratio by dividing its share price by earnings per share. Compare companies and gauge whether a stock looks cheap or expensive.
P/E
—
P/E Ratio: price-to-earnings
P/E (Price-to-Earnings, or P/L in Portuguese) is the valuation multiple everyone reaches for first: P/E = share_price / EPS, with EPS being earnings per share over the last 12 months. Read it as how much the market is willing to pay for each R$ 1 of the company's yearly profit. A low P/E (< 10) can point to an undervalued company, or just a mature or cyclical sector. A high P/E (> 30) usually bakes in expectations of strong growth. Tech names like NVIDIA trade at P/E 60+, and Tesla has run past 70+, while Brazilian banks tend to sit at P/E 8–12. Once a company posts a loss, P/E turns negative or just stops meaning anything. There's also the Shiller P/E (CAPE), which averages 10 years of inflation-adjusted earnings; it's the one analysts favor at the index level because it smooths out the cycles.
Applications and context
It's a cornerstone metric in fundamental analysis (Status Invest, Investidor10, Simply Wall St), used for stock screening, sector comparison and value investing in the Graham/Buffett tradition. The one rule to keep in mind: always compare P/E against peers in the same sector. A P/E of 15 is cheap for tech and expensive for a bank.
FAQ
What's a "good" P/E? There's no universal number. Hold it up against the sector median and the company's own track record. The S&P 500 has historically averaged somewhere around 15–20.
Trailing vs forward P/E? Trailing leans on the last 12 months of realized earnings; forward uses analyst estimates for the year ahead. Forward P/E tends to be more useful for growth stories, though it's only as good as the analyst behind it.
Why is P/E useless for some companies? When profit hovers near zero, goes negative, or swings wildly, the ratio stops telling you anything. For those cases, reach for P/S (sales), EV/EBITDA, or P/B (book value) instead.
Related Tools
Stock Trade Profit Calculator
Compute profit/loss on stock buy/sell: buy price, sell price, qty, fees. 15% IR on profit.
Markup and Margin Calculator
Compute sale price from cost + markup or margin (and vice versa). Also explains the difference between markup and margin — a common retail confusion. Everything in your browser.
Fendi Baguette Bag Price
Estimates the approximate price of a Fendi Baguette bag by finish.
Black-76 Put Price (Options on Futures)
Works out the premium of a European put option on futures with the Black-76 model, the Black-Scholes version for when the underlying is a future or forward contract. The price is e^(−rT)·[K·N(−d2) − F·N(−d1)], where d1 and d2 come from the futures price, the strike, the volatility and the term. The future already carries the cost of carry, so the discount factor multiplies both terms and interest does not enter d1. It applies to puts on commodities, indices and rates. Enter the futures price, the strike, the risk-free rate, the term in years and the annual volatility.
Vasicek Bond Price
Computes the price of a zero-coupon bond with the Vasicek model, the first short-rate interest-rate model with mean reversion. It describes the short rate oscillating around a long-run mean and yields a closed form for the bond price from four parameters: reversion speed, mean, volatility and current rate. Despite allowing negative rates, it's the foundation of the whole family of term-structure models. Enter the parameters and the maturity, and see the price and implied yield.
Cartier Juste un Clou Bracelet Price
Estimates the approximate price of a Cartier Juste un Clou bracelet by size.
The results provided by this tool are for general informational and educational purposes only and do not constitute professional, financial, medical, legal, tax or accounting advice. Always confirm important decisions with a qualified professional and official sources.