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Nvidia
Estimated Fair Value$344.69
Current Price$229.28
Valuation Gap50.3%
Historical Median P/E43.58x
Current P/E28.99x
Price-to-Earnings (P/E)
For informational and educational purposes only • Not investment advice.
Compare P/E valuations across companies
Apple
Estimated Fair Value$238.27
Current Price$336.64
Valuation Gap-29.2%
Historical Median P/E27.36x
Current P/E38.65x
Alphabet
Estimated Fair Value$523.38
Current Price$351.66
Valuation Gap48.8%
Historical Median P/E26.29x
Current P/E17.66x
Microsoft
Estimated Fair Value$632.78
Current Price$535.07
Valuation Gap18.3%
Historical Median P/E35.23x
Current P/E29.79x
Selected P/E scenario
What is Price-to-Earnings (P/E) Valuation?
Price-to-Earnings (P/E) Valuation estimates a company's Fair Value based on its earnings and the P/E multiple applied to those earnings.
The P/E ratio compares a company's share price with its Earnings per Share (EPS). It shows how the market values the company in relation to the earnings it generates.
Historical P/E ratios show the valuation multiples at which the company has traded in the past. They can be used as a reference for estimating Fair Value from the company's Earnings per Share.
P/E Valuation is most useful for profitable companies with relatively stable earnings and a meaningful historical P/E range.
How the P/E Model Works
The Price-to-Earnings model estimates fair value by calculating the company's historical valuation multiple, selecting a valuation P/E, and applying it to Earnings per Share.
Historical
Prices & EPS
→
Calculate
Historical P/E
→
Select
Valuation P/E
→
Apply to
EPS
→
Fair Value
per Share
P/E Formula
Key Model Assumptions
• The company must have positive Earnings per Share.
• The current EPS input is based on trailing twelve-month (TTM) earnings when four consecutive quarterly periods are available; otherwise, the latest annual EPS is used.
• Historical P/E ratios are calculated only for years with valid positive earnings.
• The 10 most recent valid historical P/E ratios are used to estimate the company's typical valuation multiple.
• The median historical P/E forms the Base valuation assumption.
• Conservative and optimistic scenarios adjust the median historical P/E.
• Historical valuation multiples may not remain representative if the company's growth, risk or profitability changes materially.
• The current EPS input is based on trailing twelve-month (TTM) earnings when four consecutive quarterly periods are available; otherwise, the latest annual EPS is used.
• Historical P/E ratios are calculated only for years with valid positive earnings.
• The 10 most recent valid historical P/E ratios are used to estimate the company's typical valuation multiple.
• The median historical P/E forms the Base valuation assumption.
• Conservative and optimistic scenarios adjust the median historical P/E.
• Historical valuation multiples may not remain representative if the company's growth, risk or profitability changes materially.
Step 1 — Calculate Historical P/E Ratios
Historical P/E = Year-End Share Price / Historical EPS
Historical Median P/E = Median of the 10 most recent valid historical P/E ratios
Historical Median P/E = Median of the 10 most recent valid historical P/E ratios
The model calculates historical P/E ratios from historical share prices and Earnings per Share. The median of the 10 most recent valid P/E ratios is then used as the company's historical valuation benchmark.
Step 2 — Select the Valuation Multiple
Selected P/E = Median Historical P/E × Scenario Adjustment
The selected scenario adjusts the historical median P/E to determine the valuation multiple used to estimate Fair Value.
Step 3 — Estimate Fair Value per Share
Fair Value per Share = EPS × Selected P/E
The selected P/E multiple is applied to Earnings per Share to estimate Fair Value per Share.
Step 4 — Compare With the Current Market Valuation
Current P/E = Current Price / EPS
Valuation Gap = Fair Value per Share / Current Price − 1
Current P/E shows the multiple currently assigned to the company's earnings, while the Valuation Gap compares the estimated Fair Value with the current stock price.