Price to Earnings Ratio (PE)
Calculate the price earnings ratio (P/E), a valuation ratio that compares a company’s stock price to its earnings per share.
The price earnings ratio is a widely used valuation metric that helps investors assess the relative value of a company’s stock. A higher P/E ratio may indicate that the market has high expectations for the company’s future growth, while a lower P/E ratio may suggest that the company is undervalued.
The formula is as follows:
\[\text{Price to Earnings Ratio} (P / E) = \text{Share Price} / \text{Earnings per Share} (\text{EPS})\]Also known as: PE ratio, P/E ratio, price-earnings ratio, earnings multiple.
Price to Earnings Ratio (PE) in Python
get_price_to_earnings_ratio is part of the Ratios module of the open-source Finance Toolkit. Install it with:
pip install financetoolkit -U
Then call get_price_to_earnings_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")
pe_ratio = toolkit.ratios.get_price_to_earnings_ratio()
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| AAPL | 31.6299 | 21.254 | 31.3868 | 41.1631 | 36.418 |
| TSLA | 215.568 | 34.0154 | 57.6961 | 198.126 | 418.189 |
Parameters
get_price_to_earnings_ratio accepts the following parameters:
- include_dividends (bool, optional): Whether to include dividends in the calculation. Defaults to False.
- diluted (bool, optional): Whether to use diluted shares in the calculation. Defaults to True.
- rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
- growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
- lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
- standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
- trailing (int, optional): Defines whether to select a trailing period. E.g. when selecting 4 with quarterly data, the TTM is calculated.