PE Ratio Analyser — Is Your Stock Overvalued?
The Price-to-Earnings (PE) ratio compares a stock's price to its earnings per share — giving you a quick read on how expensive the market thinks a business is relative to what it actually earns. A PE number alone tells you little; what matters is whether it's high or low compared to the stock's own history and to Benjamin Graham's intrinsic value estimate. This tool combines both checks so you can make a more informed judgement in under 60 seconds.
How to use this tool
- Enter the stock name and its current PE ratio — available on NSE, BSE, or Screener.in.
- Enter the 5-year average PE — find this on Screener.in under the stock's valuation chart or PE band.
- Enter the current market price and your expected EPS growth rate for the next 3 years.
- Click Analyse to instantly see the verdict, Graham intrinsic value, and your margin of safety.
Frequently Asked Questions
What is a good PE ratio for Indian stocks?
There is no universal answer — it depends on the sector and growth rate. As a rough benchmark, Nifty 50 has historically traded between 18–25x PE. A stock trading significantly above its sector average usually means the market has priced in high growth expectations, which increases downside risk if growth disappoints.
How do I find the 5-year average PE of a stock?
You can find historical PE data on Screener.in, Tijori Finance, or Trendlyne. Search for the stock, open the "Valuation" or "Charts" section, and look for the PE band chart. The median PE over 5 years is a reliable baseline for comparison.
What is Graham's intrinsic value formula?
Benjamin Graham's formula is: Intrinsic Value = EPS × (8.5 + 2g), where EPS is earnings per share (CMP ÷ current PE) and g is the expected annual EPS growth rate. The 8.5 represents the base PE for a zero-growth company. It is a quick sanity check, not a precise target price.
What is margin of safety?
Margin of safety is the percentage gap between a stock's intrinsic value and its current market price. If intrinsic value is ₹200 and the stock trades at ₹150, your margin of safety is 25%. Benjamin Graham recommended a minimum 25–33% margin of safety to protect against estimation errors and unexpected bad news.
Is PE ratio enough to value a stock?
No — PE is a starting point, not a final answer. A low PE can indicate a value opportunity or a value trap. Always combine PE analysis with revenue growth trend, return on equity (ROE), debt-to-equity ratio, free cash flow generation, and management quality before making any investment decision.
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