P/E Ratio Calculator

Calculate the price-to-earnings ratio of any stock and understand what it means. Educational only — not financial advice.

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Share price

Earnings per share (EPS)

EPS type

TTM = trailing twelve months (actual). Forward = analyst estimate for next year.

What is the P/E ratio?

The P/E ratio tells you how much investors are paying for every £1 of a company's earnings. A P/E of 15 means you're paying £15 for £1 of annual profit.

Higher P/E = more growth expected. Lower P/E = either good value or a struggling business. Context always matters.

Under 10 — low, often cyclical or value
10–20 — typical FTSE range
20–40 — growth premium priced in
40+ — significant growth expectations

Results are illustrative only. P/E ratios vary significantly by sector and market conditions. This is not financial advice.

Enter a share price and EPS above to calculate the P/E ratio.

How to use this calculator

1Enter the share priceType the current share price and pick the unit — UK shares are usually quoted in pence (p), so 842 means 842p. Switch to £ for US or pounds-denominated prices.
2Enter earnings per share (EPS)Add the company's earnings per share in the same currency unit. You'll find it in the results announcement or on the stock's fundamentals page.
3Choose the EPS typeTTM (trailing twelve months) uses the last year of actual earnings. Forward uses analysts' estimate for next year — a forward P/E is usually lower if earnings are expected to grow.
4Read the ratio and its contextThe calculator shows the P/E multiple, the earnings yield (its inverse), and how the stock compares to FTSE 100, FTSE 250 and S&P 500 averages.

What the P/E ratio tells you

The price-to-earnings (P/E) ratio is the single most quoted valuation number — it tells you how much you pay for each £1 of a company's annual profit.

A P/E of 15 means investors are paying £15 for every £1 of yearly earnings. All else equal, a lower P/E is cheaper — but "all else" is rarely equal. A high P/E usually reflects expectations of strong future growth; a low P/E can mean genuine value, or a business the market expects to shrink.

The ratio only makes sense in context: against the company's own history, its sector peers, and the wider market. Comparing a fast-growing software firm's P/E to a mature utility's tells you very little on its own.

How it's calculated

The formula is simply price divided by earnings per share. The earnings yield is the inverse, expressed as a percentage — useful for comparing a stock against bond yields or a savings rate.

P/E ratio = Share price ÷ Earnings per share (EPS)
Earnings yield = 1 ÷ P/E, shown as a %

What counts as a high or low P/E?

There is no universal "good" P/E, but these bands are a useful starting point for UK-listed shares:

Under 10 — low. Often cyclicals, out-of-favour value stocks, or businesses the market expects to decline.
10–20 — the typical FTSE 100 range for steady, profitable companies.
20–40 — a growth premium is priced in; earnings are expected to expand meaningfully.
40+ — high expectations, common in fast-growing tech or pharma. Little margin for disappointment.

The catch: earnings can be misleading

A P/E is only as reliable as the "E". One-off gains, write-downs, or an unusually good or bad year can distort trailing earnings, making a stock look artificially cheap or expensive. A company with temporarily depressed profits can show a sky-high P/E that means nothing.

That's why serious analysis pairs the P/E with cash-flow-based measures like a DCF valuation, and with quality checks on how those earnings are actually generated.

Frequently asked questions

What is a good P/E ratio?

There is no single "good" P/E — it depends on the sector, growth rate, and interest-rate environment. As a rough guide, most established FTSE 100 companies trade between 10 and 20 times earnings. Always compare a stock's P/E to its own history and to close peers rather than judging it in isolation.

How do I calculate the P/E ratio?

Divide the share price by the earnings per share (EPS), using the same currency unit for both. For example, a share priced at 900p with EPS of 60p has a P/E of 15. Our calculator handles pence-versus-pounds conversion automatically.

What is the difference between trailing and forward P/E?

Trailing (TTM) P/E uses the last twelve months of actual reported earnings. Forward P/E uses analysts' forecast earnings for the year ahead. If profits are expected to grow, the forward P/E will be lower than the trailing one.

What is earnings yield?

Earnings yield is the inverse of the P/E ratio, expressed as a percentage (1 ÷ P/E). A P/E of 20 equals a 5% earnings yield. It's handy for comparing a stock directly against bond yields or cash savings rates.

Can a P/E ratio be negative?

If a company is loss-making, EPS is negative and the P/E ratio becomes meaningless (often shown as "n/a"). For unprofitable companies, investors turn to revenue multiples, cash flow, or forward estimates instead.

Why do two similar companies have very different P/E ratios?

Usually because the market expects different growth, or perceives different risk. A higher P/E implies more expected earnings growth or greater confidence; a lower P/E can signal doubts about the durability of profits. Differences in debt, margins, and sector also play a part.

P/E is just the start

Openbook shows the P/E of every UK stock alongside growth, quality, value and cash-flow scores — so you can see whether a low multiple is a bargain or a warning sign.

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This calculator is for educational purposes only and does not constitute financial advice. Always do your own research or consult a regulated adviser before investing.