Nvidia: EPS, P/E and PEG in one real example

What this lesson covers

• How EPS, P/E and PEG connect when you look at one real company
• Checking a P/E ratio yourself, instead of taking the website's word for it
• What happened to Nvidia's revenue, net income and EPS over several years
• Why a P/E ratio can fall while a company is growing strongly
• The difference between trailing P/E and forward P/E
• What a PEG of around 0.45 does and does not tell you
• Why no single ratio should make a decision on its own

One thing to be clear about first. This is not a recommendation to buy, sell or hold Nvidia. Nvidia is used here purely as a teaching example, because it gives us interesting numbers to work with and shows the three ratios moving in ways a textbook example never would.

What we already know

A quick reminder of the three ideas before we put them together.

So far we have met each of these separately. Now we look at one real company and see how they relate to each other.

Nvidia at a glance

Four numbers from the summary page, viewed 16 September 2026.

Notice the first two sitting side by side. The price of one share and the total value of the company are two different things — the share price is about $212, while the whole company is valued at roughly 5.1 trillion US dollars.

The two figures underneath are the ones this lesson is built on. Trailing twelve months, often shortened to TTM, simply means the most recent twelve months of reported results.

Let's check the P/E ourselves

The website gives us a P/E ratio. We do not have to take it on trust — we already know the formula.

Divide 212.17 by 7.91 and you get approximately 26.8 — very close to the figure Yahoo Finance is showing. The formula from Lesson 5 is not just something sitting on a slide. It works on a real quote page, and you can check it in a few seconds.

Read in plain English: at this moment, investors are paying roughly 27 times Nvidia's trailing earnings.

That on its own does not tell us whether the company is expensive or cheap. For that we need context — which is where it becomes interesting.

Look what happened to earnings

This is the financial statements page. There are a great many numbers on it, and as a beginner you do not need to understand every one. We only want three columns.

Revenue first, because it is the simplest. Around $27 billion in the year to January 2023, then $61 billion, then $130 billion, then roughly $216 billion — and about $303 billion on the trailing twelve month figures.

But revenue is not the same as profit. Net income attributable to common shareholders went from around $4.4 billion to roughly $120 billion over the same period, and about $193 billion on a trailing twelve month basis.

And now EPS. Seventeen cents, then $1.19, then $2.94, then $4.90, and currently around $7.91. This is the EPS idea from Lesson 4 happening in a real company: as profits rose substantially, earnings per share rose substantially.

The other half of the EPS calculation. Remember that EPS also depends on the number of shares. Nvidia's diluted average share count has declined somewhat over this period, which can support EPS. But looking at these figures, the far larger change is the increase in net income.

This is why it is worth looking behind the EPS number. Rather than stopping at "EPS is $7.91", you can ask why it rose — what happened to revenue, what happened to profit, and what happened to the share count.

P/E can fall even when a company grows

Here is the part beginners often find surprising. Nvidia's trailing P/E has been falling.

From the high 50s, down through the 40s and 30s, to around 27 today. At first that sounds odd. The company has grown enormously and its market value is enormous. So why would the P/E ratio come down?

Go back to the formula: price divided by earnings per share. If earnings grow faster than the share price, the P/E ratio falls.

That is an important idea to hold on to. A share price can rise while the P/E ratio falls, and the two are not contradictory at all. It depends entirely on what earnings are doing underneath.

Which is also why looking only at the share price never tells you the full story.

Trailing P/E and forward P/E

On the statistics page there are two P/E figures, and they do not match.

The difference is the tense. Trailing P/E uses earnings a company has actually reported. Forward P/E uses what analysts expect earnings to be. If they expect earnings to increase, the forward P/E will look lower than the trailing one.

But remember what an estimate is. Future earnings have not happened yet. If the company's performance changes, those expectations change too. Forward P/E can be useful — it just should never be treated as a guaranteed future number.

Now add PEG

And here is where Lesson 6 connects. The five-year expected PEG ratio showing on the statistics page is approximately 0.45.

Remember what PEG is trying to do. P/E gives us a relationship between price and earnings. PEG attempts to bring expected earnings growth into that valuation discussion.

Be careful with the shortcut. You will sometimes hear that a PEG below 1 automatically means a company is undervalued. Treat that with caution. A PEG ratio depends on growth estimates, and estimates can be wrong. Growth can slow. Competition can increase. Costs can change. The wider economy can change.

PEG gives you another piece of information. It does not give you the final answer.

Don't let one ratio make the decision

This is probably the most important part of the lesson. EPS is useful. P/E is useful. PEG can be useful. None of them should make an investment decision for you.

When you research a company, you are gradually building a bigger picture out of pieces like these — including what assumptions investors are already making about future growth.

You do not need to learn all of that today. We will keep building these concepts step by step.

The key takeaway

Instead of asking "is a P/E of 27 good or bad?", start asking a slightly better question:

"What is happening to the business behind that number?"

With Nvidia we have seen substantial growth in revenue, net income and EPS. At the same time, we have seen the P/E ratio decline considerably from earlier levels. And we have seen how PEG tries to bring expectations for future growth into the picture.

That is why these ratios become far more useful when you connect them, rather than looking at each number in isolation.

Where to go next

If you'd like to see these ideas applied to real companies and real results, How Markets Think is where I write that up each week — earnings, deals and market moves, explained in plain English.