Operating PE Ratio

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Definition

Click the "Learn More" link below to see how we calculate operating earnings yield.

The Operating PE Ratio is the price an investor pays for one dollar of pre-tax operating earnings.

It is similar to a standard PE Ratio, but some investors consider it a better indicator of future earning power than earnings yield since the earnings number excludes tax effects, non-operating income and expenses, discontinued operations, extraordinary items, preferred stock dividends and accounting change differences.

Formula

YCharts calculation: Market Capitalization / TTM Operating Earnings
(None given if TTM Operating Earnings are negative)

Where:

TTM Operating Earnings excludes:
- Earnings from discontinued operations
- Extraordinary items
- Preferred stock dividends
- Accounting changes
- Other non-operating earnings and expenses

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