Earnings-Based Stock Valuation Calculator: a practical guide
What share price comes from the yearly earnings and ratio I enter?
See the share price implied by a company's yearly earnings and a price ratio you choose.
By VolatileShares · Example version 1 · Updated . Hypothetical inputs, not financial recommendations or live company data.
A worked example, in plain English
The idea in 10 seconds: P/E is a price tag for each $1 of yearly company profit per share.
Change the assumptions. Change the implied price.
An implied price is not fair value or a forecast. Check the earnings period and currency.
- Assumption-based share price
- $30.00
- Reference P/E
- 12.5
- Difference from reference (not a forecast)
- 20%
Walk me through the full calculation
Annual diluted earnings of $2.00 per share, multiplied by your assumed P/E of 15, imply $30.00 per share. Your reference price is $25.00, which corresponds to about 12.5 times those earnings.
The scenario is 20% above the reference price. This does not mean the stock is cheap or expensive, or that it will reach that price. Verify the EPS period, share class and assumptions, then review cash, debt and dilution separately.
Inputs used for this example
These are the calculator's example defaults, not suggested amounts or rates. Market calculators initially display USD. Change currency in the toolbar without creating a personal profile. Under optional Location & display settings, choose an example country for its currency and available historical CPI. Review any example household size and rent assumption before explicitly applying local assumptions: matching unedited budget/inflation fields change, while edited or restored inputs are kept. Lifestyle budgets are fictional examples, not measured national averages. Local tax, pension and borrowing links are guidance, not personal calculations. Switching currency alone does not change percentages, ages or share counts.
- Yearly profit per share (diluted EPS, USD)
- 2
- Price-to-earnings ratio to try (P/E)
- 15
- Share price to compare against (USD)
- 25
Work backwards from your goal
What P/E assumption would imply this share price?
Start with a share price and see the P/E assumption it implies.
Choose Work backwards, enter your target and the few essential inputs, then choose Calculate my goal. The answer is checked with the same forward calculation and applied in one step. Example assumptions are disclosed under More options. Expand Calculation details & tools only if you want more detail. Impossible or out-of-range goals show an error instead of invented numbers. Long numbers display commas while editing; calculations and saved snapshots keep the original precision.
Return to the interactive calculator above →How the calculation works
Scenario price = annual diluted EPS x assumed P/E. Difference from reference = (scenario price / reference price - 1) x 100.
What this cannot tell you
Not fair value, a target price or an expected return. Use positive annual diluted EPS in USD and a same-currency, same-share-class reference price. Verify period and source; excludes debt, cash, future dilution and cyclicality. Not suitable for loss-making companies.
Changing an assumption changes the example, not the future. Verify source dates and actual product, tax and lending terms before relying on any result. These tools do not replace appropriately qualified advice.
The multiple can move the answer without changing earnings
At $2 of annual diluted earnings per share, a P/E assumption of 10 implies $20; a multiple of 20 implies $40. Earnings are identical in both examples. This demonstrates sensitivity to an assumption—not that either price is fair value.
Illustrative arithmetic, not market evidence or a promise of returns.
Keep a useful starting point
In the interactive calculator, compare different assumptions or explicitly save a named snapshot to My browser notebook. Saving is optional and browser-only, not an account or cloud backup. Revisit it on the same browser profile; restoring never refreshes prices or assumptions.