P/E P/B Valuation
Evaluate stock using Price/Earnings and Price/Book ratios
What is this tool?
P/E (Price-to-Earnings) and P/B (Price-to-Book) ratios are the most fundamental valuation metrics for stocks. P/E compares market price per share to earnings per share — a lower P/E suggests undervaluation. P/B compares market price to book value per share, useful for financials and asset-heavy companies. This tool helps you compare a stock's current multiples against its historical averages and peer group, identifying whether the stock is cheap or expensive relative to fundamentals.
How to use
- 1
Enter stock data
Input current price, EPS, and book value per share.
- 2
Add peer comparison
Enter historical or peer group averages for P/E and P/B.
- 3
View valuation
See fair value range, over/undervaluation assessment, and peer comparison table.
Frequently Asked Questions
What is a "good" P/E ratio?
There is no universal answer. The S&P 500 average P/E is around 20x. Growth stocks typically trade at higher P/E (30-50x), while value stocks trade lower (10-15x). The key is comparing a stock's P/E to its own historical range and to peers in the same industry. A "low" P/E is only attractive if the earnings are sustainable and not about to decline.
When is P/B ratio most useful?
P/B is most useful for financial companies (banks, insurance) and asset-heavy businesses (manufacturing, utilities) where book value closely reflects replacement cost. It is less useful for technology companies and service businesses where intangible assets (brand, IP, talent) dominate value creation and are not reflected on the balance sheet.
What is the PEG ratio?
The PEG ratio = P/E divided by the earnings growth rate. A PEG of 1.0 suggests fair value. Below 1.0 suggests undervaluation. Above 2.0 suggests overvaluation. PEG is more useful than P/E alone because it accounts for growth — a P/E of 30 may be cheap for a company growing 30% annually (PEG = 1.0) but expensive for a company growing 5% (PEG = 6.0).