PER Calculator
Calculate the Price-to-Earnings Ratio (PER) to evaluate whether a stock is undervalued or overvalued based on its current price, net income, and number of outstanding shares.
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PER Calculator
Determine the Price-to-Earnings Ratio (PER) of a stock based on its current stock price, net income, and number of outstanding shares.
These results are for reference only and were developed for educational and testing purposes. You can also directly access and review the source code, including the logic and free APIs used on this page.
Calculation Results
PER Calculator Guide
The Price-to-Earnings Ratio (PER) Calculator is a tool designed to help you assess a stock's valuation by calculating the ratio of its current stock price to its earnings per share (EPS), derived from net income and outstanding shares. This guide provides instructions on using the calculator and objective information about the PER metric.
How to Use the PER Calculator
Follow these steps to calculate the PER:
- Enter the Current Stock Price: Input the stock's current market price per share.
- Enter the Net Income: Input the company's net income, typically available from financial statements.
- Enter the Number of Outstanding Shares: Input the total number of shares outstanding.
- Calculate: Click "Calculate PER" to view the result and detailed analysis.
Understanding the Price-to-Earnings Ratio (PER)
The PER is a widely used financial metric to evaluate a company's stock valuation. It is calculated as:
- EPS Formula: EPS = Net Income ÷ Number of Outstanding Shares
- PER Formula: PER = Current Stock Price ÷ EPS
- It indicates how much investors are willing to pay per dollar of earnings.
- A higher PER may suggest a stock is overvalued, while a lower PER may indicate undervaluation, though this depends on industry and market conditions.
Factors Affecting PER
Several factors influence a stock's PER:
Earnings Per Share (EPS)
EPS represents a company's net income divided by its outstanding shares.
- Higher EPS lowers the PER, potentially indicating better value.
- EPS can be affected by accounting practices and one-time events.
Stock Price
The current market price reflects investor sentiment and market conditions.
- Rising prices increase PER, possibly signaling overvaluation.
- Price volatility can distort short-term PER analysis.
Industry Norms
PER varies by industry due to differing growth rates and risk profiles.
- Technology stocks often have higher PERs due to growth expectations.
- Utility stocks typically have lower PERs due to stable earnings.
Interpreting PER Results
PER benchmarks vary, but general ranges include:
Low PER (e.g., below 15)
- May indicate an undervalued stock or low growth expectations.
- Common in mature or cyclical industries.
Average PER (e.g., 15-25)
- Typical for stable, moderately growing companies.
- Often seen as a balanced valuation.
High PER (e.g., above 25)
- May suggest overvaluation or high growth expectations.
- Common in tech or emerging sectors.
Final Tips for Using the Calculator
- Use accurate and up-to-date stock price, net income, and shares outstanding data from reliable financial sources.
- Compare the calculated PER with industry averages for context.
- Consider additional metrics (e.g., P/B ratio, dividend yield) for a comprehensive analysis.
- Consult a financial advisor for investment decisions.
Results are estimates and may differ from real-time market data or due to external factors not accounted for here.