Valuation ratios put a share price in context. A $84 stock is not expensive or cheap on its own; it is expensive or cheap relative to the earnings, dividends, assets and cash flow behind each share. Enter the price and whatever per-share figures you have, and the calculator returns eight ratios with a reading for each.
How to use the stock valuation ratios calculator
- Enter the current share price and trailing twelve-month earnings per share (EPS).
- Add an expected EPS growth rate for the PEG ratio and annual dividends per share for the yield and payout ratio.
- Optionally enter book value, revenue and operating cash flow per share, and shares outstanding in millions for market capitalization.
- The P/E ratio appears on the tape; the table below lists every ratio with its formula.
Most per-share figures are listed in a company’s annual report (Form 10-K) or on any quote page. To get a per-share figure yourself, divide the company total by diluted shares outstanding.
Valuation ratio formulas
Worked example
A stock trades at $84.00 with EPS of $4.20, expected growth of 12% a year and a $1.68 annual dividend.
P/E = 84.00 ÷ 4.20 = 20.0, so the earnings yield is 4.20 ÷ 84.00 = 5.0%
PEG = 20 ÷ 12 = 1.67
Dividend yield = 1.68 ÷ 84.00 = 2.0%; payout ratio = 1.68 ÷ 4.20 = 40%
Book value of $30 per share gives P/B = 2.8; revenue of $42 per share gives P/S = 2.0; operating cash flow of $6 gives P/CF = 14.0
With 50 million shares, market capitalization = 84 × 50,000,000 = $4.2 billion
Investors are paying $20 for each dollar of current earnings. The PEG above 1.5 suggests the price already assumes solid growth, while a 40% payout leaves room for the dividend to keep rising.
Which ratio fits which company
| Situation | Most useful ratios | Why |
|---|---|---|
| Steady, profitable company | P/E, dividend yield, payout | Earnings and dividends are reliable |
| Fast-growing company | PEG, P/S | Earnings are small relative to future potential |
| Banks and insurers | P/B | Assets are mostly financial and marked near market value |
| Capital-intensive or volatile earnings | P/CF | Cash flow is harder to distort with accounting choices |
| Loss-making company | P/S, earnings yield | P/E is not meaningful |
Limits of valuation ratios
- Accounting differences. Share buybacks shrink book value and inflate P/B; acquisitions add goodwill. Read the footnotes before comparing.
- Cyclical traps. A steelmaker’s P/E looks lowest at the peak of the cycle, when earnings are about to fall.
- Growth estimates are guesses. PEG is only as good as the growth forecast you enter.
To compare a stock’s historical return with alternatives, use the CAGR calculator. To see what drives the earnings themselves, try the profitability ratios calculator.
These ratios are educational estimates, not investment advice or a recommendation to buy or sell any security. CalcFluent is not a licensed financial adviser.
Frequently asked questions
What is a good P/E ratio?
There is no universal answer. The long-run average P/E of the S&P 500 is in the mid-teens, but fast-growing companies routinely trade above 30 and slow-growing or cyclical companies below 12. Compare a stock with its own history and its direct competitors.
How is the PEG ratio calculated?
Divide the P/E ratio by the expected annual earnings growth rate expressed as a whole number. A P/E of 20 with 12% expected growth gives a PEG of 20 ÷ 12 = 1.67. Values near 1 are often described as fairly priced for growth.
Why does the calculator say P/E is not meaningful?
When earnings per share are zero or negative, the P/E ratio is undefined or negative and can't be compared. The earnings yield (EPS ÷ price) still works and simply shows a negative number.
What does a payout ratio above 100% mean?
The company is paying more in dividends than it earned per share over the period, funding the difference from cash reserves or borrowing. That can't continue indefinitely unless earnings recover.
Should I use trailing or forward EPS?
Trailing twelve-month EPS uses reported results and is objective. Forward EPS uses analyst estimates for the next year and suits fast-changing companies. Use the same basis when comparing stocks.