Understanding PE, EPS, and ROE Filters on NSE
Introduction
Fundamental screening starts with understanding key financial ratios. Among the most commonly used filters on the NSE Screener are PE (Price-to-Earnings), EPS (Earnings Per Share), and ROE (Return on Equity). These metrics help identify undervalued, profitable, and efficient companies in the Indian stock market. In this guide, we explain how to use each filter on the NSE Screener with examples.
What Is the PE Ratio?
PE (Price-to-Earnings) Ratio measures how much investors are willing to pay per rupee of a company’s earnings.
Formula:
iniCopyEditPE = Market Price per Share / Earnings per Share (EPS)
✅ When to Use:
- To compare stock valuation
- To find undervalued companies (Low PE)
- To avoid overvalued stocks (High PE)
Example NSE Filter:
PE < 20→ Screens companies with lower-than-average valuations
📌 Note: A low PE is not always good—consider industry averages.
What Is EPS?
EPS (Earnings Per Share) shows how much profit a company makes for each outstanding share.
Formula:
iniCopyEditEPS = Net Profit / Total Number of Shares
✅ When to Use:
- To assess profitability
- To filter out loss-making companies
- To compare earnings growth over time
Example NSE Filter:
EPS > 10→ Companies making ₹10 or more per share in earnings
📌 Tip: Use EPS with growth indicators for better insights.
What Is ROE?
ROE (Return on Equity) measures how effectively a company uses shareholders’ equity to generate profit.
Formula:
iniCopyEditROE = (Net Income / Shareholders’ Equity) × 100
✅ When to Use:
- To assess financial efficiency
- To spot high-return businesses
- To avoid poorly managed companies
Example NSE Filter:
ROE > 15%→ Companies generating good returns on invested equity
📌 Benchmark: ROE above 15% is generally considered strong.
How to Use These Filters on NSE Screener
Step-by-Step (on NSE or Screener.in):
- Go to Screener.in or use a mobile-compatible site.
- Use a custom query like: nginxCopyEdit
PE < 20 AND EPS > 10 AND ROE > 15 - Sort results by market cap or industry for comparison.
- Analyze charts and financials before investing.
Combined Screening Example
Use Case: Find fundamentally strong mid-cap stocks
Filters:
- PE < 25
- EPS > 15
- ROE > 18%
- Market Cap: ₹2,000 Cr to ₹20,000 Cr
Result: A list of profitable, reasonably valued, and efficient companies suitable for long-term investing.
When to Avoid These Filters
- In loss-making sectors: PE and EPS may be negative or irrelevant
- For short-term trading: These filters do not reflect short-term price movements
- During earnings season: EPS and PE may temporarily spike or fall
FAQs
Are these filters available on the official NSE Screener?
Yes, but in a limited form. For more flexibility, use Screener.in or Tickertape.
What is a good PE ratio?
It depends on the sector. For FMCG, 30+ is common; for metals, even 10 may be high. Always compare with peers.
Can ROE be too high?
Yes—extremely high ROE could mean low equity base or excessive debt, which requires deeper analysis.
Conclusion
PE, EPS, and ROE filters are the foundation of fundamental stock screening. They help investors quickly evaluate valuation, profitability, and capital efficiency. While these alone don’t guarantee success, they are essential for building a shortlist of high-quality stocks.
For a smarter investing journey, pair these filters with price trend analysis and risk management practices. Explore more tutorials and screeners on NSEScreener.com to refine your strategy.
