Simple P/E-based valuation estimate
⚠️ This is only one aspect of valuation - not investment advice
⚠️ Important: P/E ratio is only ONE aspect of stock valuation. Professional investors use multiple methods including discounted cash flow (DCF), price-to-book, price-to-sales, and qualitative factors. This calculator provides a simplified educational example only.
The Price-to-Earnings (P/E) ratio compares a stock's price to its earnings. It's one of the most commonly used valuation metrics.
Formula: P/E Ratio = Stock Price ÷ Earnings Per Share
A P/E of 25 means investors pay $25 for every $1 of earnings. Higher P/E suggests growth expectations or overvaluation. Lower P/E may indicate value or concerns.
The PEG ratio adjusts P/E for growth rate, providing a more complete picture.
Formula: PEG = P/E Ratio ÷ Growth Rate
Example: Stock with P/E of 25 and 15% growth has PEG of 1.67 (25 ÷ 15). This suggests moderate valuation relative to growth.
These are general ranges. Individual stocks and market conditions vary significantly. For educational purposes only.
⚠️ WARNING: P/E ratio alone is insufficient for investment decisions. This is a simplified educational tool demonstrating one basic valuation concept.
Doesn't work for unprofitable companies: Negative earnings make P/E meaningless.
Ignores debt and cash: Companies with high debt may appear cheap on P/E alone.
Backward-looking: Based on past earnings, not future potential.
Sector differences: Growth stocks naturally have higher P/E than value stocks.
Ignores business quality: Doesn't account for competitive advantages, management, or market position.
Professional approach: Investors use P/E alongside DCF analysis, price-to-book, price-to-sales, debt ratios, cash flow analysis, and qualitative factors. This calculator is for educational purposes only.
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