📈 Price & Market Data
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Current market price per share
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Total debt in millions (optional)
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Cash on balance sheet (optional)
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Trailing twelve months EPS
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Expected annual EPS growth (for PEG)
📊 Income & Balance Sheet
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Earnings before interest, tax, D&A
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Total equity ÷ shares outstanding
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Total annual dividends per share
Market Capitalization
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⚠️ Investment Disclaimer: These ratios are for educational and research purposes only. Nothing on this page constitutes investment advice. Always conduct thorough due diligence and consult a licensed financial advisor before making investment decisions.
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Sources & Methodology
All ratio formulas follow CFA Institute standards and widely accepted fundamental analysis methodology used by professional equity analysts.
CFA Institute — Equity Valuation Curriculum
Source for standardized definitions and formulas for P/E, P/B, EV/EBITDA, PEG, and other equity valuation ratios
SEC EDGAR — Company Financial Filings
Primary source for all financial data including EPS, revenue, EBITDA, book value, and equity used in ratio inputs
Investopedia — Financial Ratios Reference
Cross-reference for industry benchmark ranges and ratio interpretation guidelines used in this calculator
Methodology: P/E = Price ÷ EPS. P/B = Price ÷ Book Value Per Share. P/S = Market Cap ÷ Revenue. EV = Market Cap + Debt − Cash. EV/EBITDA = EV ÷ EBITDA. PEG = P/E ÷ EPS Growth Rate. Dividend Yield = (Annual Dividends Per Share ÷ Price) × 100. ROE = Net Income ÷ Shareholders' Equity × 100. All ratios flagged N/A when required inputs are missing or zero.
⏱ Last reviewed: April 2026
Key Stock Ratios Explained — Fundamental Analysis 2026
Stock ratios — also called valuation multiples or fundamental analysis metrics — are mathematical relationships between a company's stock price and its underlying financial data. They allow investors to quickly assess whether a stock appears cheap or expensive relative to its earnings, assets, sales, or growth, and to compare companies of vastly different sizes on an equal footing.
No single ratio tells the whole story. Professional analysts use ratios as a starting point for investigation, not as a final verdict. The most powerful approach combines multiple ratios from different categories — valuation, profitability, leverage, and income — while comparing them against industry peers and the stock's own historical averages.
Valuation Ratio Formulas
P/E Ratio = Stock Price ÷ Earnings Per Share (EPS)
Measures how much investors pay per dollar of earnings. Example: Price $150, EPS $7.50 → P/E = 20x. Interpretation: investors pay $20 for every $1 of earnings.
P/B Ratio = Stock Price ÷ Book Value Per Share
Compares price to net asset value. A P/B below 1.0 means the stock trades below its book value. Best for banks and asset-heavy industries.
EV/EBITDA = (Market Cap + Debt − Cash) ÷ EBITDA
Enterprise Value multiple that removes the effect of capital structure. More comparable across companies with different debt levels than P/E.
PEG Ratio = P/E Ratio ÷ Annual EPS Growth Rate (%)
Adjusts the P/E for growth. A PEG below 1.0 often signals undervaluation. Popularized by Peter Lynch as a quick growth-adjusted screen.
Stock Ratio Benchmarks — 2026 Reference Table
| Ratio | Formula | Typical Range | Good Value Signal |
|---|---|---|---|
| P/E Ratio | Price ÷ EPS | 15–25 (S&P avg) | < 15 vs peers |
| P/B Ratio | Price ÷ Book Value/Share | 1.0–3.0 | < 1.5 for value |
| P/S Ratio | Market Cap ÷ Revenue | 1–4 (varies by sector) | < 2 for mature cos |
| EV/EBITDA | EV ÷ EBITDA | 8–15 | < 8 often attractive |
| PEG Ratio | P/E ÷ Growth % | 0.5–2.0 | < 1.0 undervalued |
| Dividend Yield | Div/Share ÷ Price | 2%–5% | 3%–5% income |
| ROE | Net Income ÷ Equity | 10%–20% | > 15% consistently |
| Payout Ratio | Div/Share ÷ EPS | 30%–60% | < 60% sustainable |
How to Use Ratios Together
The most robust stock analysis layers multiple ratio types. A complete snapshot includes at least one valuation ratio (P/E, EV/EBITDA), one asset-based ratio (P/B), one profitability metric (ROE), one growth-adjusted ratio (PEG), and one income metric (dividend yield or payout ratio). When most ratios point to undervaluation relative to peers, the stock deserves deeper investigation. When all point to overvaluation, caution is warranted.
Sector-Specific Ratio Considerations
- Technology: High P/E and P/S ratios are normal due to growth expectations. Focus on PEG and revenue growth rate. Companies with P/S below 5 and strong growth may be attractive.
- Banking & Financials: P/B is the primary valuation tool. EV/EBITDA is less relevant because debt is a core part of the business model. ROE above 12% is a strong signal.
- Utilities & REITs: Focus on dividend yield and payout ratio. P/E is often elevated due to depreciation effects. EV/EBITDA works well for comparing capital intensity.
- Consumer Staples: P/E and EV/EBITDA are most useful. Look for consistent ROE above 15% and moderate P/E relative to the sector average of 18 to 22.
- Early-Stage / Unprofitable Companies: Use P/S and EV/Revenue since EPS-based ratios are negative or meaningless. Focus on revenue growth and gross margin trends.
💡 Analyst Tip: Always check ratios against the stock's own 5-year average, not just current peer comparisons. A company that historically traded at 25x P/E now trading at 14x may be a genuine opportunity — or may reflect deteriorating fundamentals. Context is everything.
Frequently Asked Questions
The Price-to-Earnings (P/E) ratio measures how much investors pay per dollar of earnings. It is calculated by dividing the stock price by earnings per share (EPS). For example, a stock priced at $50 with EPS of $5 has a P/E ratio of 10. A lower P/E may indicate undervaluation while a higher P/E suggests growth expectations are priced in. Always compare P/E against industry peers, not the market as a whole.
There is no single universally good P/E ratio — it depends heavily on industry and growth expectations. As of 2026, the average S&P 500 P/E ratio is approximately 20 to 25. Technology stocks often trade at P/E ratios of 30 or higher due to growth expectations, while value sectors like utilities and financials often trade at 10 to 15. Always compare to industry peers and the stock's own historical range.
The Price-to-Book (P/B) ratio compares a stock's market price to its book value per share. Book value is total assets minus total liabilities divided by shares outstanding. A P/B below 1.0 may indicate the stock trades below its net asset value. P/B is most useful for valuing banks and asset-heavy companies where book value closely reflects true asset worth. For technology companies with few tangible assets, P/B is less meaningful.
EV/EBITDA compares a company's enterprise value (market cap plus debt minus cash) to its earnings before interest, taxes, depreciation, and amortization. It is widely used because it removes the effects of capital structure and accounting differences, making it more comparable across companies. A lower EV/EBITDA generally indicates better value. Most industries consider 8 to 12 a reasonable range, though high-growth sectors trade at much higher multiples.
The PEG ratio divides the P/E ratio by the expected earnings growth rate. It adjusts the P/E for growth, allowing fairer comparisons between fast-growing and slow-growing companies. A PEG below 1.0 is often considered undervalued — the stock is cheap relative to its growth rate. A PEG above 2.0 may indicate overvaluation. Peter Lynch popularized using PEG as a quick valuation screen in his book "One Up on Wall Street."
Dividend yield equals annual dividends per share divided by the stock price, expressed as a percentage. For example, a stock paying $3 in annual dividends with a price of $60 has a dividend yield of 5%. Higher dividend yields can indicate income-focused stocks but may also signal financial stress if the payout ratio is unsustainably high. Most stable dividend payers target yields between 2% and 5% as of 2026.
The Price-to-Sales (P/S) ratio divides a company's market capitalization by its total annual revenue. It is especially useful for valuing companies that are not yet profitable, where P/E cannot be calculated. A lower P/S suggests better value relative to revenue. SaaS and high-growth technology companies often trade at P/S ratios of 5 to 20 or higher, while traditional retailers may trade at 0.2 to 1.0.
Value investors typically focus on P/E ratio, P/B ratio, EV/EBITDA, and free cash flow yield. These ratios help identify stocks trading below their intrinsic value. Benjamin Graham used P/B below 1.5 and P/E below 15 as key screens. Warren Buffett places heavy emphasis on return on equity (ROE) and earnings consistency alongside traditional valuation multiples. Combining multiple value signals reduces false positives.
A good EV/EBITDA ratio varies by industry. For most mature businesses, an EV/EBITDA between 8 and 12 is considered reasonable as of 2026. Capital-intensive industries like utilities and telecom often trade at lower multiples of 5 to 8. High-growth technology and healthcare companies can trade at multiples of 20 or more. Always compare to direct industry peers rather than using any single benchmark number.
Return on Equity (ROE) measures how efficiently a company uses shareholder equity to generate profit. It is calculated as net income divided by shareholders equity, expressed as a percentage. A higher ROE indicates more efficient use of equity capital. Warren Buffett generally targets companies with ROE above 15% consistently over multiple years. Comparing ROE trends over 5 to 10 years reveals management quality and earnings durability.
Trailing P/E uses actual reported earnings from the past 12 months and is based on known data, making it more reliable. Forward P/E uses analyst estimates for future earnings and reflects growth expectations but carries estimation risk. For cyclical businesses, trailing P/E can be misleading at earnings peaks or troughs. Most professional investors examine both together — trailing P/E for reality and forward P/E for market expectations.
The payout ratio is the percentage of earnings paid out as dividends, calculated as dividends per share divided by EPS. A payout ratio below 60% is generally considered sustainable for most businesses. A very high payout ratio above 90% may indicate the dividend is at risk if earnings decline. REITs and utilities often have higher payout ratios by design. Low payout ratios with rising dividends signal both sustainability and growth.
No single ratio tells the whole story. A complete fundamental analysis combines valuation ratios (P/E, P/B, EV/EBITDA), profitability metrics (ROE), growth indicators (PEG, revenue growth), and income measures (dividend yield, payout ratio). Compare all ratios against industry peers and the stock's own historical averages. Ratios are most powerful as relative comparison tools — a stock is cheap or expensive relative to something, not in absolute terms.
Most income investors target dividend yields between 3% and 6% as of 2026. Yields below 2% may offer limited income, while yields above 7% can signal financial distress or an unsustainable payout. Dividend growth rate matters as much as current yield — a stock yielding 3% with 10% annual dividend growth will produce more total income over a long holding period than a static 6% yield. Look for dividend aristocrats with 10+ years of consecutive increases.
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