The P/E Ratio Explained: How to Project a Stock Price
What the price-to-earnings (P/E) ratio really means, how to use it to project a future stock price, and how it signals whether a stock is cheap or expensive.
What the P/E ratio is
Where EPS comes from
EPS vs. the P/E ratio: what’s the difference?
How to calculate the P/E ratio, step by step
Trailing vs. forward P/E
What counts as a “good” P/E?
The PEG ratio: P/E adjusted for growth
How to project a price target with P/E
Why test a range (bear / base / bull)
Limitations to remember
What’s a good P/E ratio by sector?
What a negative or “N/A” P/E means
P/E vs. earnings yield (and interest rates)
Common questions about the P/E ratio
Try it on a stock: Apple Inc. (AAPL) · MICROSOFT CORP (MSFT) · Alphabet Inc. (GOOGL) · NVIDIA CORP (NVDA) · AMAZON COM INC (AMZN) · Tesla, Inc. (TSLA) · Meta Platforms, Inc. (META)