The price-to-earnings ratio is one of the most commonly used metrics that investors utilize to assess the value of a stock. For obvious reasons, a company’s P/E ratio can vary heavily throughout time based on earnings changes and price fluctuations. This is why evaluating past P/E ratios can help us grasp a better understanding of the current valuation prospects of the company that we’re analyzing.
In the following, we will go through two sites that you can use to quickly find historical P/E ratios (and many other financial metrics) for most of the stocks that you may want to analyze.
What's the Historical PE Ratio?
Historical P/E ratios are simply past values of price-to-earnings ratios. Analyzing the historical P/E ratios of a stock can provide you with a more accurate view on the changing valuation prospects of the company.
Using the current P/E ratio to assess the value of a stock makes sense when you either compare the company’s P/E with similar businesses, the industry and market averages, or with the company’s own historical standards.
For example, if company A is currently trading at a price-to-earnings ratio of 20, you would have to weigh it against a comparable measure that shows you whether the company’s PE is lower or higher in relation. You could use the average P/E ratio for the company’s operating industry, other similar companies, or its own past values.
As a result, one approach to using the P/E ratio would be to calculate the historical average of P/E ratios for the company and compare that average with the current value.
If we would find out that the historical average of P/E ratios for company A is 10, suddenly the current P/E ratio of 20 wouldn’t look so attractive anymore.
How to Find Historical P/E Ratios
The first site that you can use to find historical P/E ratios and several other financial metrics is morningstar.com. In case you’ve never heard of Morningstar, it is one of the most used financial research sites and provides a good amount of data for more than 600.000 investments trading worldwide.
Morningstar does offer a premium service with many advanced features but for our purposes, we just need to have access to the free features of the site.
1. Head over to morningstar.com and search for the company that you want to analyze in the search bar located at the top left corner of the site. In our example, we would want to look up the historical P/E ratios for Apple Inc. (AAPL).
You should now see an overview with some of the most important information about the stock, including a small price chart, business profile, and common financial metrics:
2. Under the “Valuation” tab, you should be to see the historical values for some price multiples including the price-to-earnings ratio for up to 10 years in the past:
Apple’s current P/E ratio of 25.57 has dropped from its highest point in December 2020. In the year 2018, Apple’s earnings multiple was only at 13.24, while the five-year average being 23.39. From a price-to-earnings standpoint, Apple seems to be overvalued compared to its history.
In addition to the P/E ratio, you can also look up historical values of other favorable metrics such as the earnings yield, the PEG ratio, or the enterprise value to EBITDA.
Morningstar is definitely amongst the best free sites to quickly look up fundamental stock data, especially because it also provides historical numbers for up to 10 years for many relevant financial metrics.
Another great research site that you can use for completely free is Macrotrends. It’s one of the go-to sites that I use in order to get a quick glance over important stock metrics and company-related financial data.
1. Visit macrotrends.net and simply type the name of the company or its stock ticker in the search bar located at the center of the front page:
You can click on any of the results since they will all send you to the individual data page of the company:
2. Head over to “Price Ratios”. In this section, you will be able to see a chart of the stock price, EPS, and the resulting price-to-earnings ratio of the company that you’ve searched for:
By hovering with your mouse on the chart, you can look up the exact value for each chart for even more than the past 10 years. There is also a table with all the stated P/E values below. Underneath, you can even look up the earnings multiples from competitors that are operating within the same industry.
What’s useful about this is how you can evaluate the relation between stock price and EPS that make up the price-to-earnings ratio. In other words, you can determine if any drastic P/E changes are rather due to a change in the stock price or the earnings of the business.
In our example, we can see that NVDIA’s current P/E ratio has fallen off, primarily as a result of a decreasing stock price while its EPS continued to increase during the past years.
Conclusion
Nowadays, there are many different free stock research sites that can provide you with tons of financial data. However, only a few platforms offer historical data for up to the past 10 years while still being free to use. The sites mentioned above are two of them, and looking up historical P/E ratios and lots of other fundamental data shouldn’t be too difficult for you now.
