What the Market Pays for Earnings

The price-to-earnings ratio is the most quoted valuation metric in finance: how many dollars of market price each dollar of annual earnings commands. This P/E ratio calculator computes it, plus the earnings yield and PEG ratio.

The Three Metrics

P/E = price ÷ EPS. Its reciprocal, earnings yield = EPS ÷ price, compares the stock to bond yields. Add expected growth and PEG = P/E ÷ growth answers the follow-up: is the multiple justified by the growth rate? PEG near 1 is the classic fair-value mark.

Reading It Honestly

A high P/E says the market expects strong future growth; a low one says the opposite — or that earnings are cyclical. Always compare within a sector and over time. The calculator gives you the numbers; context does the rest.