Stock Ratios Calculator
Calculate the key financial ratios for any stock. Enter company data below to get P/E, EPS, ROE, P/B, dividend yield, and debt to equity instantly.
| Ratio | Value | Formula |
|---|
Stock Ratio Benchmarks
Stock ratio benchmarks vary by industry. Use this reference table as a general guide when interpreting your calculated values.
| Ratio | Healthy Range | Signal if High | Signal if Low |
|---|---|---|---|
| P/E Ratio | 15 to 25 | Growth expectations or overvalued | Undervalued or slow growth |
| EPS | Positive and growing | Strong profitability | Losses or stagnation |
| P/B Ratio | 1 to 3 | Premium valuation | Potential undervaluation |
| Dividend Yield | 2% to 5% | Income stock | Growth stock or no dividend |
| Debt to Equity | 0 to 1 | Higher financial risk | Conservative balance sheet |
| ROE | 15% to 25% | Highly efficient | Low profitability |
| Net Profit Margin | 10% to 20% | Excellent profitability | Thin margins |
What Are Stock Ratios?
Stock ratios are financial metrics used by investors to evaluate a company’s valuation, profitability, and financial health. Stock ratios compare one financial figure to another, creating a standardized measurement that works across companies of different sizes.
Unlike raw financial numbers, ratios allow you to compare a small company to a large one on an equal basis. Investors use them to decide whether a stock is overvalued, undervalued, or fairly priced relative to its earnings, assets, and debt load.
Key Stock Ratios Explained
Price to Earnings Ratio (P/E)
The P/E ratio is the most widely used valuation metric. P/E = Stock Price / EPS. It tells you how many dollars investors pay for every dollar of earnings. A P/E of 20 means investors pay $20 for each $1 of annual earnings.
Earnings Per Share (EPS)
EPS measures company profit allocated to each share. EPS = Net Income / Shares Outstanding. Rising EPS over time is a positive indicator of growing profitability for common shareholders.
Return on Equity (ROE)
ROE measures how effectively management uses equity capital. ROE = (Net Income / Shareholders Equity) x 100. Warren Buffett famously looks for companies with consistently high ROE as a sign of durable competitive advantage.
Price to Book Ratio (P/B)
P/B compares market value to book value. P/B = Stock Price / Book Value Per Share. A P/B below 1 may mean a stock trades below its net asset value, though this can reflect business quality issues as well as opportunity.
Frequently Asked Questions
The Price to Earnings ratio measures how much investors pay for each dollar of a company’s earnings. It is calculated by dividing the current stock price by the earnings per share. A higher P/E suggests investors expect higher future growth.
A good P/E ratio depends on the industry and market conditions. Historically, the average S&P 500 P/E ratio is around 15 to 25. A P/E below 15 may indicate an undervalued stock, while a P/E above 25 may suggest the stock is priced for high growth expectations.
ROE stands for Return on Equity. It measures how efficiently a company uses shareholders’ equity to generate profit. ROE is calculated by dividing net income by shareholders’ equity and multiplying by 100. An ROE above 15% is generally considered strong.
The debt to equity ratio compares a company’s total debt to its shareholders’ equity. It is calculated by dividing total debt by total equity. A ratio below 1.0 indicates the company uses more equity than debt, generally a sign of lower financial risk.
Dividend yield is calculated by dividing the annual dividend per share by the current stock price, then multiplying by 100. For example, a stock priced at $50 that pays a $2 annual dividend has a dividend yield of 4%. It shows the income return on a stock investment.