Cape Ratio Calculator
A single year of earnings can make a market look cheap in a boom and terrifying in a slump, which is why the CAPE ratio values a stock or index against a full decade of earnings instead. Enter the current price and the last 10 years of earnings per share, and this calculator returns the Shiller CAPE, the 10-year average earnings behind it, and a plain valuation band from undervalued to expensive. Despite the similar name, this has nothing to do with the real-estate cap rate: that is covered in the final sections.
10 years of earnings per share, oldest to newest
Valuation aid, not investment advice. Shiller’s original ratio uses inflation-adjusted earnings; this tool uses nominal earnings as entered, which is fine for short horizons but can distort comparisons across high-inflation decades. The sections below show how to adjust your inputs first if you need the strict version.
Quick Answer
- Quick Answer
- How to use the CAPE ratio calculator
- The CAPE formula, step by step
- Worked example: a decade that averages to 6.25
- The valuation bands, and what history actually did
- CAPE versus the regular P/E ratio
- The inflation adjustment: what this tool does, and what it does not
- Not the cap rate: two ratios that share a nickname
- What competing calculators miss
- Frequently Asked Questions
- Add This Calculator to Your Website
- References
How to use the CAPE ratio calculator
Start with the current price: a share price for a single company, or the index level for a market, such as the S&P 500. Then fill the ten earnings boxes oldest to newest with earnings per share for each of the last ten years, or index earnings for a market. Order does not change the average, but keeping the years in sequence makes the series easier to check against your source. Press Calculate and you get the 10-year average, the ratio itself, the valuation band, and the full formula with your numbers substituted in, so you can audit the arithmetic line by line.
Where do the earnings come from? For an index, Robert Shiller publishes the long S&P 500 earnings and price series behind his own CAPE work at Yale: Robert Shiller's online data, and that is the cleanest free source. For a single stock, use reported diluted earnings per share from annual reports or a data provider, and stay consistent: one series, one definition, ten full years. Mixing adjusted earnings for some years and reported earnings for others quietly moves the average.
The CAPE formula, step by step
CAPE is one division, but the denominator takes the work: ten years of earnings averaged so that no single boom or recession year can dominate it.
The idea was developed by Robert Shiller of Yale, building on earlier work with John Campbell, and set out for a wide audience in his book covered at Irrational Exuberance, Robert Shiller's book site. Shiller received the Nobel Prize in Economic Sciences in 2013 in part for this body of work on asset prices, as the Nobel Prize biography of Robert Shiller records. The 10-year window is the point: it spans a typical business cycle, so the earnings base contains both the good years and the bad ones in roughly the proportions a long-term holder will actually live through.
Worked example: a decade that averages to 6.25
The pre-filled decade is deliberately unglamorous: earnings wobble between 5.5 and 7.0, dip in year 4 and year 8, and end at 6.4. No single year describes this business, which is exactly the situation CAPE was designed for.
| Year | Earnings per share | Running total |
|---|---|---|
| 1 | 5.5 | 5.5 |
| 2 | 6.0 | 11.5 |
| 3 | 6.2 | 17.7 |
| 4 | 5.8 | 23.5 |
| 5 | 6.5 | 30.0 |
| 6 | 7.0 | 37.0 |
| 7 | 6.8 | 43.8 |
| 8 | 6.0 | 49.8 |
| 9 | 6.3 | 56.1 |
| 10 | 6.4 | 62.5 |
| Average (62.5 / 10) | 6.25 | |
| CAPE (100 / 6.25) | 16.00 |
Notice what the smoothing did. On the latest year's earnings alone, the plain P/E would be 100 / 6.4 = 15.6. On the weakest year it would have been 100 / 5.5 = 18.2. CAPE lands at 16.00, between the two, because it refuses to judge a decade-long asset by any one year of it. Compare that with a growth measure such as the CAGR return calculator, which answers a different question: how fast earnings or value compounded, rather than what multiple the market is paying for the average.
The valuation bands, and what history actually did
The bands in this calculator come from the long United States record, where CAPE has averaged roughly 16 to 17 since the late nineteenth century. They describe where a reading sits against that history, not what happens next month.
| CAPE | Band | How to read it |
|---|---|---|
| Below 12 | Undervalued | Historically cheap territory. Worth asking what the market fears, because cheap can stay cheap while the fear is justified. |
| 12 to 18 | Average | Around the long-run mean of about 16. Valuation itself is giving you no strong signal either way. |
| 18 to 25 | Elevated | Above the mean. Long-run returns from similar starting points have typically run below average. |
| Above 25 | Expensive | Levels historically seen near major peaks. The market is pricing in a lot of good news already. |
Use the bands with the return record in mind. Starting CAPE has historically had a real relationship with the following decade of returns: high starting readings tended to precede weak ten-year returns, and low readings strong ones. That is a statement about decades, not trades. Anyone testing the idea against index history can pair this page with the S&P 500 returns calculator to see what those decades actually delivered.
CAPE versus the regular P/E ratio
Both ratios divide price by earnings. They differ in which earnings, and that difference decides when each one misleads.
Regular P/E
- Uses one year of earnings: trailing or forecast.
- Moves sharply when earnings spike or collapse, even if the price never changes.
- In a recession it can make a falling market look expensive, because the denominator fell faster than the price.
- Best for: quick comparisons between similar companies right now.
CAPE (Shiller P/E)
- Uses the average of ten years of earnings, ideally inflation-adjusted.
- Stays comparatively stable through the cycle, so changes mostly reflect price, not earnings noise.
- Can look stubbornly high for years in a long bull market, because the average still contains older, lower earnings.
- Best for: judging whether a market or a mature stock is priced richly against its own history.
Neither replaces looking at the business. CAPE says nothing about debt, moat or management, and for a young company with a short or loss-making history the ten-year average may not exist at all. In a portfolio context it belongs alongside allocation and performance checks such as the portfolio performance calculator, not in place of them.
The inflation adjustment: what this tool does, and what it does not
Shiller's published CAPE adjusts each past year of earnings into today's money using the Consumer Price Index, so a dollar of earnings from nine years ago counts for what it is worth now. This calculator averages the nominal figures exactly as you enter them, and says so in the note under the card. Over a calm decade the gap is small. Over a high-inflation decade it is not: nominal averaging understates older earnings in real terms, which pushes the average down and the CAPE up, making the market look pricier than the strict Shiller figure.
If you need the strict version, adjust before you enter: multiply each past year's earnings by (current CPI / that year's CPI), using the index published by the Bureau of Labor Statistics Consumer Price Index program, then enter the adjusted series. The calculator's arithmetic is identical either way; only the inputs change. For most single-stock checks over recent, low-inflation years, the nominal version is a fair approximation, and the band it lands in rarely changes.
Not the cap rate: two ratios that share a nickname
Search engines mix these up constantly, and the confusion costs real-estate readers real time. CAPE, this page, values shares against earnings. The cap rate values a rental property as annual net operating income divided by purchase price, a yield measure with no earnings average and no stock market anywhere in it. If you landed here pricing a property, the cap rate calculator is the tool you wanted. If you are valuing an index or a share against a decade of earnings, you are in the right place.
What competing calculators miss
Most pages ranking for this term are explainers with no working tool, data dashboards that show one market's current CAPE but will not compute yours, or generic P/E tools relabelled for the keyword.
Miss 1: no way to enter your own decade. Trackers publish the S&P 500 CAPE and stop. This page computes CAPE for any stock, index or market you have earnings for, which is the actual job the search promises.
Miss 2: the ratio with no interpretation, or interpretation with no ratio. Tools that return a bare number leave the reader to guess whether 22 is high. Here every result carries its band and a sentence on what that band has historically meant, with the long-run landmarks in the stats row above.
Miss 3: silence on inflation. Many simple tools average nominal earnings and present the result as Shiller's CAPE without qualification. This page states the caveat on the card itself and shows the CPI adjustment method, so the reader knows exactly which version of the number they hold.
Frequently Asked Questions
CAPE = current price divided by the average of the last 10 years of earnings per share. Add the ten yearly earnings figures, divide by 10 to get the average, then divide the price by that average. In the worked example the average is 6.25 and the price is 100, so CAPE is 16.00.
Against United States history, below 12 has been undervalued territory, 12 to 18 is average with a long-run mean of about 16, 18 to 25 is elevated, and above 25 is expensive. Good depends on what you mean: a low CAPE has historically preceded stronger long-run returns, but it is not a buy signal by itself, and other markets have different long-run averages.
In Shiller's original method, yes: each year of earnings is restated in current money using the Consumer Price Index. This tool averages nominal earnings as entered, which is a close approximation over low-inflation decades. To match Shiller exactly, scale each past year by current CPI divided by that year's CPI before entering the figures.
Yes, if the company has ten years of earnings per share to average. It suits mature, steadily profitable companies best. It struggles with young companies, companies that had loss-making years in the window (a negative average makes the ratio meaningless, and this calculator will tell you so), and businesses whose earnings power genuinely changed mid-decade.
No. CAPE describes valuation, not timing. Expensive markets have stayed expensive for years, and the ratio's historical relationship is with returns over the following decade, not the following quarter. Investors typically use it to set expectations and position sizes, not as a sell trigger.
Ten years is long enough to contain a full business cycle: expansion, recession and recovery. Averaging across the whole cycle stops a single boom year from making the market look cheap or a single crash year from making it look dear, which is the core defect of the one-year P/E that Shiller set out to fix.
The regular P/E divides price by one year of earnings, trailing or forecast. CAPE divides price by the average of ten years of earnings. The one-year version reacts to every earnings swing; the ten-year version mostly reacts to price, which is why CAPE changes slowly and suits long-horizon valuation judgements.
No. They share a spoken nickname and nothing else. CAPE is a stock and index valuation ratio built on earnings per share. The cap rate is a real-estate yield: annual net operating income divided by property price. Use the cap rate calculator for property and this page for shares and indexes.
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References
- Robert J. Shiller, Yale University, online data page: the long-run United States stock price, earnings, dividend and interest rate series used for CAPE research. Yale University: Robert Shiller Online Data. Accessed October 2026.
- Robert J. Shiller, Irrational Exuberance book site: background on valuation ratios and the long-run stock market outlook research behind CAPE. Irrational Exuberance: Robert Shiller. Accessed October 2026.
- Nobel Prize Outreach, Robert J. Shiller biography and facts, 2013 Prize in Economic Sciences for empirical analysis of asset prices. Nobel Prize: Robert J. Shiller Facts. Accessed October 2026.
- U.S. Bureau of Labor Statistics, Consumer Price Index program: the inflation index used to restate past earnings in current money for the strict Shiller calculation. Bureau of Labor Statistics: Consumer Price Index. Accessed October 2026.