How to Calculate Fundamental Analysis
Calculator
Guide
Introduction & Importance
Fundamental analysis is a method used to evaluate the intrinsic value of a company by examining its financial statements and other factors. It’s crucial for investors to make informed decisions about whether to buy, sell, or hold a stock.
How to Use This Calculator
- Enter the price per share, earnings per share, and number of shares outstanding.
- Click ‘Calculate’.
- View the results and chart below.
Formula & Methodology
The primary metric calculated here is the Price-to-Earnings (P/E) ratio, which is calculated as:
P/E Ratio = Price per Share / Earnings per Share
Real-World Examples
| Company | Price per Share | Earnings per Share | P/E Ratio |
|---|---|---|---|
| Apple | $135.25 | $5.71 | 23.7 |
| Microsoft | $253.64 | $7.94 | 31.9 |
| Amazon | $3,175.00 | $42.63 | 74.6 |
Data & Statistics
| Sector | Average P/E Ratio |
|---|---|
| Technology | 25.3 |
| Healthcare | 28.7 |
| Consumer Discretionary | 22.1 |
Expert Tips
- Compare a company’s P/E ratio to its industry average and historical average.
- Consider other valuation metrics, such as the Price-to-Book (P/B) ratio and the Price-to-Sales (P/S) ratio.
- Always review a company’s financial statements and other relevant data points.
Interactive FAQ
What is the P/E ratio and why is it important?
The P/E ratio is a valuation metric that measures the price of a stock relative to its earnings per share. It’s important because it helps investors determine if a stock is overvalued or undervalued.
What is a high P/E ratio?
A high P/E ratio indicates that investors are paying a premium for a company’s earnings. This could be due to high growth expectations, but it could also indicate that the stock is overvalued.
For more information, see the Investopedia guide on P/E ratio and the SEC’s guide on investing.