Stock PE Forward PE and PB Ratio Calculator

P/E and P/B: the two pillars of fundamental analysis

P/E (Price-to-Earnings) tells you how much the market is willing to pay for each R$ 1 of annual profit: P/E = price / EPS. P/B (Price-to-Book, or P/VP in Portuguese) does the same against accounting net worth per share: P/B = price / BVPS. Take a stock at R$ 30 with EPS of R$ 3 and book value of R$ 20. That works out to P/E = 10 and P/B = 1.5. As a rough guide, a P/E < 10 reads as cheap while P/E > 30 is expensive, with growth already baked into the price. On the P/B side, anything < 1 means the stock trades below book value, which is common for banks and mature industrials, and > 2 signals investors are paying a premium for intangibles or growth. Brazilian banks like Itaú and Bradesco usually trade around P/E 5–8 and P/B 1–1.5, whereas tech names like NVIDIA push into P/E 20+ and P/B 10+.

Applications and context

These are bread-and-butter numbers in fundamental analysis and turn up in every stock screener, from Status Invest to Investidor10 and Simply Wall St. They also underpin value investing in the Graham/Buffett tradition. Benjamin Graham's "Defensive Investor" formula, for one, asked for P/E < 15 and P/E × P/B < 22.5. They earn their keep when you're comparing companies within a sector, hunting for the undervalued ones, or steering clear of stocks priced for a bubble.

FAQ

What is a "good" P/E? There's no single right answer. Hold it up against the sector median and the company's own track record. A P/E of 15 looks cheap for tech and pricey for a bank.

Why does P/B < 1 not always indicate a bargain? Sometimes it's flagging a damaged business, a book value that's been overstated, or losses the market already sees coming. Check ROE and the earnings trend alongside it before drawing conclusions.

When do P/E and P/B stop working? They break down for companies running losses (negative P/E), for ones loaded with intangibles like software or brands that never hit the books, and for those carrying extreme leverage. In those cases reach for EV/EBITDA, P/S, or a DCF instead.