PER Calculator (Price-to-Earnings Ratio)
Use this simple calculator to compute PER, earnings yield, and an estimated fair price based on a target PER multiple.
What Is PER?
PER stands for Price-to-Earnings Ratio (often written as P/E). It tells you how much investors are willing to pay today for each dollar of a company’s earnings. If a stock trades at $100 and earns $5 per share, its PER is 20. In plain language, investors are paying 20x current earnings.
The ratio is widely used in value investing, growth investing, and broad market analysis. It is simple, fast, and useful, but it should never be used in isolation.
PER Formula (Cálculo PER)
Core Formula
PER = Price per Share ÷ Earnings per Share (EPS)
Related Formula
Earnings Yield = EPS ÷ Price per Share
Earnings yield is the inverse of PER and is often expressed as a percentage. For example, a PER of 20 equals an earnings yield of 5%.
How to Use This Calculator
- Enter the current stock price.
- Enter EPS (trailing 12 months or forward estimate).
- Optionally enter a target PER to estimate fair value.
- Click Calculate PER to see your result.
If you add a target PER, the calculator also estimates upside/downside relative to the current price.
Interpreting PER Correctly
Lower PER is not always “cheap”
A low PER may indicate undervaluation, but it can also signal weak growth, declining margins, legal risk, or industry disruption.
Higher PER is not always “expensive”
A high PER can be justified for businesses with durable competitive advantages, strong cash generation, and high long-term growth potential.
Compare like with like
PER works best when comparing companies in the same sector. Comparing a utility to a software company using PER alone is usually misleading.
Common PER Mistakes to Avoid
- Using stale EPS data during fast earnings cycles.
- Ignoring debt levels and balance-sheet risk.
- Treating cyclical peak earnings as sustainable.
- Overlooking one-time accounting gains or losses.
- Applying one “normal” PER to all market regimes.
A Practical Example
Suppose a company trades at $75 and has EPS of $3.00:
- PER = 75 ÷ 3.00 = 25
- Earnings Yield = 3.00 ÷ 75 = 4.00%
If you believe a fair PER is 20 for this business, fair price would be: 3.00 × 20 = $60. That implies the stock may be above your fair-value estimate.
Final Thought
The PER ratio is an excellent first-pass valuation tool. Use it to frame questions, not to end analysis. Combine it with growth rates, free cash flow, return on capital, and business quality to make better long-term decisions.