P/E Ratio Calculator
The P/E (Price-to-Earnings) ratio is a valuation metric for a company, often used to determine whether a stock is over or undervalued. It represents the ratio of a company's current share price to its earnings per share (EPS). A higher P/E ratio indicates that investors are expecting higher earnings growth in the future compared to companies with a lower P/E ratio.
The P/E ratio can be calculated using one of the following formulas:
- Market Value / Net Earnings After Taxes: This method uses the company's total market value divided by its net earnings.
- MPS (Market Price per Share) / EPS (Earnings per Share): This method uses the market price per share divided by the earnings per share.
- 1 / Cost of Equity: This method uses the inverse of the company's cost of equity, multiplied by 100.
Method 1: Market Value / Net Earnings After Taxes
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Method 2: MPS (Market Price per Share) / EPS (Earnings per Share)
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Method 3: 1 / Cost of Equity
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