The P/E ratio says how many dollars you pay for each dollar of a company's yearly profit. It is the most searched valuation figure, and the easiest to misread. Here is the formula, a worked example, and the 25 largest companies side by side, with the reasons some numbers should not be taken at face value.
Verified figures, not advice. Prices are closes of 12 Oct 2026; profits are the last twelve months from each company's filings. This explains how to read a ratio. It does not say whether any stock is cheap.
P/E = share price ÷ earnings per share, which is the same as market value ÷ net income. The second form is easier to check, because both numbers come straight from the filings.
Worked example, Nvidia: market value $5.45tn (price $226.32 times 24.10 billion shares) divided by net income of $192.9bn over the last twelve months gives 28.3x. Read it as: the market asks about 28 dollars for each dollar of profit Nvidia earned in the past year.
Among the 23 companies with a profit, the median P/E is 32.2x, the lowest is 9.7x (SK hynix) and the highest 392.5x (Tesla). That spread of about 40 times is the first lesson: a single "normal" P/E does not exist. n.m. means not meaningful: a loss makes the ratio impossible to read.
The ratio is only as good as the profit in it. Three of the lower P/Es carry large one-off gains that will not repeat:
CompanyP/E as reportedOne-off gain in the profitP/E without it (computed)
Alphabet
17.7x
$149bn pre-tax unrealized gains on equity stakes
45.4x
Amazon
20.7x
$77bn pre-tax revaluation gains on its Anthropic stake
48.0x
SK hynix
9.7x
$57bn one-time gains on financial instruments and dividends
18.3x
Computed by subtracting the stated gain from reported net income and dividing market value by the rest. This is a rough check: it ignores tax on the gain and any other one-offs, so it shows the direction, not a precise figure. Gains as described in each company's filings, read 13 and 14 October 2026.
The opposite problem: Tesla (392x), Palantir (166x), AMD (151x) show a P/E above 100x. The ratio is huge because the profit is small next to a very large market value, which reflects expected growth, not past earnings. A P/E of 392x does not mean a stock is 392 times too dear; it means today's profit is a poor guide to what buyers expect.
Intel and SpaceX lost money over the last twelve months, so their P/E cannot be computed. In that case analysts use other ratios, such as enterprise value to sales. We show these on each company page.
- Check the profit first. Look for gains, litigation costs or write-downs in the last twelve months. Each of our company pages lists them.
- Compare like with like. Banks, chip makers and retailers have different normal ranges. Compare a company with its closest competitors, not with the market.
- Look at the date. Trailing P/E uses past profit. Forward P/E uses an analyst forecast, which is an opinion.
- Use a second ratio. Enterprise value to EBITDA ignores differences in debt; price to book suits banks.
Each of the 25 pages above does these steps for one company. For the wider idea, see what we mean by value.
Questions people ask
What is a good P/E ratio?
There is no good number on its own. In the 25 companies above it runs from 9.7x to 392.5x, and the median is 32.2x. Compare a company with its competitors and with its own history, and check what is inside the profit.
Is a low P/E better?
Not necessarily. A low P/E can mean a bargain, a business in decline, or a profit swollen by a one-off gain, as the table of three companies shows. Find out which before you conclude anything.
What does a negative P/E mean?
A company with a loss has no meaningful P/E. Sites usually show "n/a" or "n.m." rather than a negative number.
What is the difference between trailing and forward P/E?
Trailing P/E divides price by profit already reported over the last twelve months. Forward P/E divides by a forecast of next year's profit. We use trailing, because every figure can be checked in the filings.
Is P/E the same as market value divided by net income?
Yes. Price divided by earnings per share equals market value divided by net income, apart from small differences in share counts. The second form is easier to verify.