P/E Ratio & Fair Price Calculator

The price-to-earnings ratio is the share price divided by the company's earnings per share. It says how many rupees you pay for each rupee of yearly profit. Flip it over and you get the earnings yield, which lets you compare a share with a bond or a savings account.

Trailing P/E uses the last reported full year, so it is factual but out of date by the time results age. Forward P/E uses an expected, annualised EPS, so it is current but only as good as the estimate. The calculator shows both whenever the data exists.

A high P/E can be fair for a company that is growing fast, and a low P/E can be poor value for one that is shrinking. The PEG ratio folds growth into the multiple.

Sign issues. PEG only makes sense when both numbers are positive. A negative growth rate flips the sign and would make a shrinking company look cheap; zero growth is a division by zero; and a negative P/E is not a P/E at all. In those cases the calculator shows n/a rather than a misleading number. The growth rate is also the weakest input: it defaults to the growth the latest results imply (the latest quarters scaled to a full year, against last year's EPS), which is one period and can be a one-off jump. Above 50% the calculator leaves it out, and in the PEG card you can enter your own view.

Pick the multiple you think is fair and the calculator turns it into a price. It can also run backwards: given today's price and a target multiple, what EPS would justify paying it?

A stock trades at Rs 200.00 with EPS of Rs 25.00 and expected growth of 10%. Its P/E is 8, its earnings yield is 12.5% and its PEG is 0.8. At a target P/E of 10x the fair price is Rs 250.00, which is +25% against the current price, and the EPS needed to justify Rs 200.00 at 10x is Rs 20.00.

There is no honest single answer, so this tool does not invent one. What a P/E should be depends on the interest rate, the sector and the company. Rates are the clearest anchor in Pakistan: with the 10-year PIB yielding 12.85% as of the State Bank's October 7, 2026 auction, a stock needs a P/E of about 7.8 just to match the bond's yield with its earnings. When rates were lower, investors accepted higher multiples; when they rise, multiples tend to compress.

Sectors differ too. Steady, high-payout businesses and cyclical ones are usually valued on lower multiples than companies with durable growth. The best comparison is a stock's own P/E history and its sector peers, which you can see on each company's page, for example LUCK, or line up in the stock comparison. The multiple presets (5x, 8x, 10x, 12x, 15x) are starting points for your own judgement, not benchmarks.

• Cyclical peaks. A low P/E on record profits can be a trap. For oil, cement and fertiliser companies, ask whether EPS is a normal year or the top of a cycle.
• One-off gains and losses. Revaluation gains, tax settlements and write-offs move EPS without changing the business. The result announcement shows which.
• Debt and quality. Two companies can have the same P/E and very different balance sheets. P/E says nothing about borrowing, cash conversion or dividends.
• Timing. Trailing EPS lags the price. Forward EPS is an estimate. Neither is the future.
• Growth is nominal. With high inflation, rupee profits can grow while real profits do not. PEG does not adjust for that.

Pair P/E with a cash-based view such as the intrinsic value calculator, a balance-sheet view such as the Graham number, and for payers the dividend yield calculator.