P/E Ratios - how to calculate

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Using the stock ASX as an example.

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To achieve a Price-to-Earnings (P/E) ratio of 15 at its current earnings, the share price of ASX Ltd (ASX:ASX) would need to be A$37.37.

The Math Behind the Target Price

A company's P/E ratio is calculated by dividing its current share price by its Earnings Per Share (EPS): [1]

Rearranging this formula allows us to find the target share price required to reach a specific P/E ratio: [1]

Target Share Price = Target P/E Ratio  X Current EPS

Current Trailing EPS (2026): A$2.49 per share.
Target P/E Ratio: 15. [1]

Target Share Price = 15  X $2.4915=  $37.37

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Current Valuation vs. Historical Context

Current Share Price: A$58.65 (as of October 2, 2026).
Current P/E Multiple: 23.54.
Implied Price Drop: For ASX to reach a P/E of 15, the stock would need to fall approximately 36.3% from its current levels, assuming earnings remain unchanged.

While a P/E of 15 is roughly in line with the long-term historical average of the broader Australian stock market (which typically sits around 14.7x to 15x), ASX Ltd itself has historically commanded a higher market premium. Over the past decade, its median P/E multiple has hovered closer to 27.8 due to its unique, low-competition position as the country's primary financial market infrastructure operator. [1, 2, 3, 4]

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