Price to earnings calculator

Published August 16, 2026

P/E is price per share divided by earnings per share. A $50 share on $2.50 of earnings is 20 times. The same 20 comes from dividing market cap by total earnings.

Price to earnings

20.0x

Market cap $5,000,000,000 over $250,000,000 of earnings.

Price per share: $50.00
Earnings per share: $2.50
Market cap: $5,000,000,000
Total earnings: $250,000,000

Price per share

Earnings per share

Trailing twelve months on a teaching sheet. Negative EPS makes P/E unusable.

Shares outstanding

In millions of shares. 100 here is 100,000,000 shares.

The formula

\text{P/E} = \frac{P}{\text{EPS}} = \frac{\text{Market cap}}{\text{Earnings}}

$P$ is the share price and EPS is earnings per share. Multiplying both by the share count gives market cap over total earnings, which is the same ratio.

Two routes, one number

A P/E of 20 means buyers are paying twenty times one year of profit for the shares, or, read the other way, that current profit would take twenty years to add up to the price.

On a $50 share with $2.50 of earnings, P/E is 20. With 100,000,000 shares outstanding, market cap is $5,000,000,000 and total earnings are $250,000,000. Divide those two and the ratio is 20 again.

Market capitalisation over earnings is often the easier route when you have the totals and not the per-share figures. The price to earnings ratio definition is the one-sentence version of this page.

Raise earnings, hold the price

Keep the $50 price and 100,000,000 shares. Raise EPS to $5.00. P/E falls to 10. Market cap is still $5,000,000,000. Total earnings are now $500,000,000.

The price did not move. The denominator did. A lower P/E here is a more profitable year, not a cheaper share. That is why a low P/E at the top of a cycle, when earnings are at a peak that will not repeat, can be the expensive reading.

A higher price on a smaller firm

Price is now $80, EPS still $2.50, shares 50,000,000. P/E is 32. Market cap is $4,000,000,000. Total earnings are $125,000,000.

The ratio is higher than 20 and the firm is smaller than the first sheet. P/E hides scale. It also means most inside a sector: a regulated utility with flat earnings and a software firm reinvesting everything are not priced on the same scale.

Enterprise value over EBITDA is a different ratio on a different claim: debt sits in the numerator and the denominator is before interest. Do not line a P/E up next to EV/EBITDA and call the gap a finding.

What this page is not doing

It is not a trailing against forward switch. Trailing P/E uses the last twelve months of reported earnings. Forward P/E uses estimates for the year ahead, so it moves whenever the estimates do. Type the EPS your course or your sheet is using.

When earnings are zero or negative the ratio stops working. This calculator prints no P/E in that case rather than a nonsense multiple. Loss-making firms get compared on revenue, not here. This is educational material, not financial advice.

Worked examples

A \$50 share on \$2.50 of earnings

The share price is $50, EPS is $2.50, and 100,000,000 shares are outstanding. What is P/E, and what is market cap?

P/E is price over EPS: $50 / 2.50 = 20$ .
Market cap: $50 \times 100000000 = 5000000000$ , so $5,000,000,000.
Total earnings: $2.50 \times 100000000 = 250000000$ , so $250,000,000.
The same P/E from the totals: $5000000000 / 250000000 = 20$ .

P/E is 20. Market cap is $5,000,000,000. Total earnings are $250,000,000.

The same price on \$5.00 of earnings

Keep the $50 price and 100,000,000 shares. EPS is now $5.00. What is P/E?

P/E: $50 / 5 = 10$ .
Market cap is still $5,000,000,000.
Total earnings: $5 \times 100000000 = 500000000$ , so $500,000,000.

P/E falls to 10. Market cap is still $5,000,000,000. Earnings are $500,000,000.

An \$80 share on a smaller count

Price is $80, EPS is $2.50, shares outstanding 50,000,000. What is P/E?

P/E: $80 / 2.50 = 32$ .
Market cap: $80 \times 50000000 = 4000000000$ , so $4,000,000,000.
Total earnings: $2.50 \times 50000000 = 125000000$ , so $125,000,000.

P/E is 32. Market cap is $4,000,000,000. Earnings are $125,000,000.

The mistake that costs the most

Reading a low P/E as cheap and a high one as expensive.

On the second sheet, P/E fell from 20 to 10 because earnings doubled, not because the share got cheaper. A low P/E often reflects earnings the market expects to fall. A high P/E can be growth that has not arrived yet.

The other error is mixing trailing and forward P/E, or lining P/E up against EV/EBITDA as if they priced the same claim.

Common questions

What if earnings are negative?

The ratio stops working. This page will not print a P/E when EPS is zero or negative. Compare those firms on revenue, or on a different multiple, not on this one.

Trailing or forward?

Trailing uses reported earnings. Forward uses estimates. They are not interchangeable. Type the EPS your sheet is using. The formula does not know which one you meant.

Why type the share count?

So the same ratio can be read from market cap over total earnings. If you only have the per-share figures, the share count still has to be in the identity for those two routes to meet.

Keep reading

This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.