Price Earnings Ratio (PE Ratio) The price-earnings ratio is a measure of how much buyers are willing to pay for shares in a company, based on that company’s earnings. Price earnings ratio is calculated by dividing the current price of a share in a company by the most recent year’s earnings per share of the company. This ratio is a useful way of comparing the value of stocks and may help to indicate expectations for the company’s growth in earnings. It is important, however, to compare the P/E ratios of companies in similar industries. Price-earnings ratio is sometimes also called the "multiple".