Stock Valuation & Return Ratios Calculator
Calculate P/E, P/B, Dividend Yield, ROE, and ROA — the core ratios used to evaluate a stock.
What this calculator does
Calculates the five most commonly cited stock valuation and profitability ratios in one place — P/E, P/B, Dividend Yield, ROE, and ROA — from a company's share price and financial statement figures.
Who this is for
Individual investors evaluating a stock before buying, students learning fundamental equity analysis, or anyone comparing a company's valuation and profitability against industry peers.
Methodology
P/E Ratio = Share Price ÷ EPS. How much investors pay per dollar of earnings.
P/B Ratio = Share Price ÷ Book Value Per Share. How the market values the company relative to its accounting net worth.
Dividend Yield = (Annual Dividend Per Share ÷ Share Price) × 100. Annual dividend income as a percentage of share price.
ROE (Return on Equity) = (Net Income ÷ Total Equity) × 100. How efficiently the company generates profit from shareholders' equity.
ROA (Return on Assets) = (Net Income ÷ Total Assets) × 100. How efficiently the company generates profit from its total asset base.
Worked example
$150 share price, $7.50 EPS, $45 book value per share, $3.00 annual dividend, $500 million net income, $4 billion equity, $9 billion assets: P/E = 150 ÷ 7.50 = 20. P/B = 150 ÷ 45 = 3.33. Dividend Yield = (3 ÷ 150) × 100 = 2%. ROE = (500M ÷ 4,000M) × 100 = 12.5%. ROA = (500M ÷ 9,000M) × 100 = 5.56% — the gap between ROE and ROA here suggests the company uses meaningful leverage (debt financing), since ROE is more than double ROA.
Interpretation
P/E and P/B ratios are most meaningful when compared against direct industry peers, not as absolute thresholds — a "high" P/E in one sector can be entirely normal in a faster-growing one. ROE measures profitability relative to shareholder capital, but can be inflated by high debt levels (leverage), so it's worth checking alongside a Debt-to-Equity figure. ROA strips out the effect of leverage, showing how efficiently the whole asset base generates profit regardless of how it's financed.
Return ratios compared
Run the calculator above to compare Dividend Yield, ROE, and ROA.
Common mistakes
- Comparing P/E across different industries. A tech company and a utility company have structurally different typical P/E ranges — compare within the same sector.
- Reading high ROE as automatically good. Heavy debt can inflate ROE without the business actually being more efficient — check leverage ratios alongside it.
- Using stale EPS or book value figures. These change every reporting period; using outdated figures gives a misleading snapshot.
- Ignoring the gap between ROE and ROA. A large gap between the two (ROE much higher than ROA) signals significant leverage — worth checking the company's Debt-to-Equity ratio before assuming the high ROE reflects pure operational efficiency.
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Frequently Asked Questions
Why would ROE be much higher than ROA for the same company?
A large gap usually signals significant financial leverage — the company is using debt to finance a large asset base, which can boost ROE (profit relative to shareholder equity alone) without necessarily improving how efficiently the total assets generate profit (ROA). Checking Debt-to-Equity alongside these two ratios clarifies whether that's the case.
What is a good P/E ratio?
There's no universal good number — it depends heavily on industry and growth expectations. Comparing P/E within the same industry is more meaningful than an absolute threshold.
Is a P/B ratio below 1 always a bargain?
Not necessarily. It can indicate undervaluation, but it can also reflect genuine business problems or an industry where book value poorly reflects real worth.
Is this investment advice?
No. This calculates standard financial ratios for informational and educational purposes only, not a recommendation to buy or sell any security. Consult a licensed financial advisor before making investment decisions.