The (price-to-earnings ratio) divides the share price by the earnings per share. A P/E of 15 means: you pay 15 times the annual profit that falls on one share. The (price-to-sales ratio) uses revenue instead of profit. It can also be calculated when a company makes a loss.
Do the math
Price €45, earnings per share €3 → P/E 45 ÷ 3 = 15. Revenue per share €25 → P/S 45 ÷ 25 = 1.8. Turned around, the P/E gives the : 3 ÷ 45 = 6.67%. That is how much the company earns per year, measured against the price – usually only part of it is paid out.
No P/E with a loss
If the profit is zero or negative, the P/E gives no meaningful value. The key figures bar in the chart then says “Loss”. The P/S can still be calculated, but says nothing about whether the company will ever make a profit.
Which profit?
There are P/E ratios based on the profit of the last fiscal year, of the last four quarters or on estimated future profits. Estimates can be off. Only compare P/E ratios calculated the same way. Our bar uses the reported earnings per share of the last fiscal year.